Boeing Earnings Preview

By Jon Ostrower 
 

Boeing Co. is scheduled to announce its third-quarter earnings before the market opens on Wednesday. Here's what you need to know:

EARNINGS FORECAST: Net profit for the quarter of $1.77 a share is the consensus of analysts, according to FactSet, compared with $1.51 a year prior. Analysts tend to focus on Boeing's "core" earnings, which exclude parts of its pension expenses driven by market volatility. Consensus expectations are for core earnings of $1.97 a share, compared with $1.80 a year ago.

REVENUE FORECAST: Revenue of $23.0 billion is forecast for the quarter, compared with $22.13 billion a year ago.

WHAT TO WATCH: DREAMLINER COSTS--Boeing has delivered nearly 200 787 Dreamliners since 2011, with production accelerating to 10 a month. Boeing says the program is profitable, based on its accounting method, which spreads costs and revenue for the 787 over many years. But currently it still costs millions of dollars more to make each Dreamliner than Boeing sells them for, and analysts are watching for indications of whether the company's cost-reduction plans remain on pace.

--TANKER PROGRESS: Boeing booked an unexpected $425 million pretax charge last quarter for its development of the new aerial refueling tanker for the U.S. Air Force after it was forced to fix wiring on its first set of test jets. The problem pushed the first flight of its prototype to mid- to late-November from June. With its defense unit shrinking as Pentagon budgets slim, cost overruns on new programs are directly on Boeing's shoulders.

--LUCKY 777?: Boeing is upgrading its 777--long a cash cow--into the 777X, scheduled for delivery starting in 2020. In the meantime, the company needs about 60 orders every year to 2019 to maintain its production rate of 100 a year before handing over in 2020. Boeing has 41 orders for its current 777s so far in 2014 and analysts will be listening for indications of whether this "production bridge" is coming together, as company leadership has assured will happen.

Write to Jon Ostrower at jon,[e-mail]

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