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Boeing's 2016 Delivery Numbers: Commercial, Defense Down

Zacks Equity Research

Aerospace behemoth The Boeing Company BA reported 2016 deliveries, which show that both commercial and defense shipments were down 1.8% and 2.6%, respectively, on a year-over-year basis.

2016 Deliveries

Boeing reported commercial deliveries of 748 planes during 2016, which was down due to lower 737, 747 and 767 deliveries. The figure is, however, above the company’s guidance of deliveries between 740 and 745 jets for 2016. The year-end figure is likely to beat the delivery numbers reported by its archrival, Airbus Group SE EADSY. Airbus had projected deliveries of 670 jets in 2016. The company is scheduled to report annual orders and deliveries on Jan 11.

In 2016, Boeing delivered 490 737 airplanes, followed by 137 deliveries of the 787 model. In the year-ago period, the company had delivered 495 units of the 737 and 135 units of the 787 model. Boeing delivered 99 units of the 777 model in 2016, compared with 98 units a year ago. Other deliveries include 13 767s and 9 747s, compared with 16 and 18 units, respectively.

In the defense and space business, Boeing’s deliveries were 185 in 2016, down from 190 a year ago. Total deliveries consisted of 65 AH-64 Apache helicopters (both new and remanufactured) and 50 Chinook helicopters (new and renewed). The company also delivered 4 C-17 Globemaster IIIs, 1 C-40A, 25 F/A-18s, 18 P-8 models, 15 F-15s, 2 Military Satellites, and 5 Commercial and Civil Satellites.

Q4 Shipments

Boeing reported fourth-quarter 2016 commercial deliveries of 185 airplanes were up year over year due to higher demand for the 737, 777 and 767 jets. Sequentially, the numbers reflected a 1.6% decline. Delivery of the single-aisle 737 jet increased to 122 in the fourth quarter from 120 a year ago.

Shipments of the 777 and 787 Dreamliners were 26 and 33, compared with 21 and 34 in the year-ago period, respectively. For the 747 and 767 jets, the company’s deliveries were a respective 1 and 3, compared with 5 and 2 in the year-ago quarter.

In the defense and space business, Boeing’s deliveries totaled 40 in the fourth quarter of 2016, down from 44 a year ago and 50 in the preceding quarter. Total deliveries consisted of 13 AH-64 Apache helicopters (both new and remanufactured) and 10 Chinook helicopters (new and renewed). The company also delivered 1 C-40A, 5 F/A-18s, 5 P-8 models, 4 F-15s, and 2 Commercial and Civil Satellites.

Boeing’s total deliveries were 225 units in the fourth quarter of 2016, compared with 230 a year ago.

2016 Order Details

Looking at the 2016 order details of Boeing, the company booked 668 net commercial orders (accounting for cancellations), valued at $94.0 billion at current list prices. This reflects a decline from the year-ago figure of 768. The order includes 550 orders for the 737, 58 for the 787, 26 for the 767, and 17 each for the 747 and the 777.

Our View

Boeing’s deliveries were sluggish due to the transition to the 737 MAX. The new MAX planes take longer time in assembling than the old 737 models.

However, deliveries are expected to rise this year as the company begins rolling out the MAX planes. Meanwhile, Boeing intends to cut the production rate of the 777 wide-body jets by 40%.

Moreover, Boeing anticipates the commercial fleet to double over the next two decades to 45,240 airplanes by the end of 2035, backed by sustained 4.8% annual growth in commercial passenger traffic. For that, the world will need 39,620 new planes, worth $5.9 trillion, between 2016 and 2035.
Boeing is slated to release fourth-quarter 2016 numbers on Jan 25.

Price Movement

Shares of Boeing have gained 22.2% over the last 12 months, outperforming the Zacks categorized Aerospace–Defense industry’s gain of 19.7%. This could be because the company’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, ongoing share repurchases and earnings accretive acquisitions.

Zacks Rank & Key Picks

Boeing currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stock in the same space is Lockheed Martin Corporation LMT and Engility Holdings, Inc. EGL.

Lockheed’s earnings beat estimates by 26.2% in the last reported quarter. The Zacks Consensus Estimate for 2017 moved up by 1.2% in the last 60 days to $12.63. Lockheed Martin sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Engility carries a Zacks Rank #2 (Buy). On an average, Engility has delivered a positive earnings surprise of 23.19% in the trailing four quarters. The company’s 2016 earnings estimates increased 13.4% over the last 60 days.

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Boeing Company (The) (BA): Free Stock Analysis Report
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Airbus Group (EADSY): Free Stock Analysis Report
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