Boeing Q1 Deliveries Show Continued Uptrend - Analyst Blog

The aerospace giant The Boeing Company BA reported strong numbers for first quarter 2014 deliveries, with commercial deliveries jumping almost 18% year over year. This commercial aerospace behemoth is indeed flying high in spite of the many technical glitches weighing upon it and its popular Dreamliner model. Boeing's share price closed at $128.78 on Apr 3, reflecting a gain of 55.6% over the last twelve-month period. The company has delivered a one-year return of about 50.0%, outperforming the S&P's return of 20.4%.

In its first quarter of 2014, Boeing delivered 161 airplanes, approximately 17.5% higher than the year-ago number. During the quarter, the Next Generation 737 model continued to be the pillar of Boeing's strength in the commercial airplane sector with deliveries of 115 airplanes, followed by its 777 model with 24 deliveries. Both these models continue to perform better than competing models owing to their fuel efficiency and lower operating costs. In the year-earlier period, the company had delivered 102 units of the 737 and 24 units of the 777 model.

Boeing also delivered 18 787s during the first quarter 2014, while delivering only 1 unit in the year-ago period.

Meanwhile, Boeing's deliveries in the defense and space business numbered 46 in the first quarter 2014 compared with 45 in the comparable period last year. In the quarter under review, numbering among the total deliveries were 17 Chinook helicopters, 11 F/A-18E/F and EA-18G fighter jets and 10 Apache helicopters. The company also delivered 4 units of F-15, 3 C-17 and 1 AEW&C.

The gradual recovery in the global economy is bringing in a steady improvement in passenger and freight traffic. This is amply reflected in Boeing's record backlog of $441 billion at the end of 2013.

Despite setbacks and technical snags, its 787 Dreamliner continues to be a popular choice for major airlines. The company even boosted the production rate of its new 787 as well as the 737. Commercial Airplanes' 2014 deliveries are expected to be between 715 and 725 airplanes. This includes approximately 110 units of 787 deliveries.

Again, the fourth generation of the 737 family – the 737 Max – is a premier aircraft from Boeing's stable and sees brisk demand in the single-aisle market for its fuel efficiency and low carbon dioxide emissions.

Given its impressive track record of both innovation and fuel efficiency, we expect Boeing to come out with record jet deliveries driven by strong commercial numbers in the future. Last year, jet deliveries reached an all-time high, beating Boeing's own projection. The company expects passenger traffic in the Asia-Pacific region to rise by leaps and bounds driven by growing economies.

However, cutbacks in the U.S. defense budget have certainly shaken the confidence of many investors.

Boeing currently has a Zacks Rank #3 (Hold). Well-placed players in the aerospace and defense industry include Huntington Ingalls Industries, Inc. HII, Wesco Aircraft Holdings, Inc. WAIR and Embraer SA ERJ. Huntington Ingalls and Wesco Aircraft carry a Zacks Rank #1 (Strong Buy) while Embraer holds a Zacks Rank #2 (Buy).