In most worlds Boeing’s second quarter financial report Wednesday should have been a cause for at least minor celebration.
After all, the aerospace company:
• Reported a 52 percent increase in second quarter net earnings to $2.24 a share. Those earnings handily beat a consensus Wall Street estimate of $2.02 a share.
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• Saw its operating margin jump from 7.9 percent to 8.1 percent.
• Raised its earnings guidance for the year by 75 cents to between $7.90 and $8.10 a share.
• Repurchased 11.4 million shares worth $1.5 billion.
• And reported its backlog of orders totals $440 billion including 5,200 commercial aircraft.
Boeing chief executive James McNerney said he was pleased.
“Strong operating performance across our production programs and services businesses drove revenue and earnings-per-share growth and healthy operating cash flow, which supported $1.5 billion in additional share repurchases in the quarter,” McNerney said.
But Wall Street, ever the petulant parent, looked past the good grades on Boeing’s report card and focused in on the B-minus it achieved for not meeting analysts’ own guesstimate of second quarter revenues and the C minus it achieved for spending some $272 million more to move its airborne tanker program forward than it had hoped.
At midday Wednesday, Boeing stock was down $2.94 a share or 2.27 percent.
“To us it is worrying that Boeing is booking a charge of this magnitude at a relatively early stage in this long-term program, particularly given recent assurances from management that everything was going to plan,” RBC Capital Markets analyst Robert Stallard wrote in an analysis of the earnings report.
Boeing is working to use its tried-and-true 767 airliner as a basis for a new fleet of airborne tankers for the Air Force. It won the contract in a fierce competition with Airbus. Boeing’s price for the planes was considerably below that of its European rival, causing some analysts concern that the company could lose money on the contract if it runs into design or production problems.
The tanker program and a contract to build submarine-hunting patrol planes based on the Boeing 737 are two of the pillars of Boeing’s defense work which is seeing the sunset approaching for several major defense aircraft programs, the F-18 and F-15 fighters and the C-17 transport.
Meanwhile, the Puget Sound-based commercial airplane program is picking up the corporate slack raising production rates on three of its aircraft, the 737 single-aisle jet, and the 777 and 787 twin-aisle planes.
Boeing reported 181 commercial aircraft delivered in the second quarter compared with 169 in the same quarter last year. Despite the increased deliveries, the company didn’t meet Wall Street’s own target for quarterly revenues, $22.3 billion, falling $300 million short.