The Boeing Company (BA - Free Analyst Report), the aerospace giant, had a strong third quarter. Revenues, at $17.0 billion, were actually ahead of the year before, although we had looked for a slight decline. And share earnings of $1.12 appeared sterling versus our estimate of $0.94 and the 2009 deficit of $2.22.

The good results reflected a solid quarter for the Commercial Airplanes division, which delivered 124 aircraft, compared with 113 the year before, with good profitability. Notwithstanding continued delays on the new 787 and 747-8 airliner programs, R&D expenses have declined sharply. In fact, these costs dipped under $1.0 billion in the latest quarter, a far cry from the $3.6 billion charged in the 2009 period, which had resulted in the large deficit recorded a year ago.

The company now expects deliveries of the 787 (847 orders in hand) to begin in the first quarter of 2011, with shipments of the problem-laden 747-8 slated to begin in mid-2011.

Meanwhile, orders for Boeing's commercial aircraft continue to come in, with gross orders in the quarter of 257, reduced by 36 cancellations. As a result, the company's jetliner backlog now stands at 3,401 aircraft, valued at $255 billion.

The good performance by Commercial Airplanes more than offset a 23% overall year-to-year dip in operating profits in the Defense, Space & Security unit.

Investors should note that our estimates and projections exclude any benefits from the Air Force's plan to replace hundreds of ancient KC-135 tanker aircraft. Boeing is competing against Airbus Industrie (the European consortium) for the contract, with the final award scheduled sometime in November. The first order (of three planned) is likely to be worth about $35 billion, though no specific timetable has been announced.

In light of the company's improved outlook, we have raised our 2010 share-earnings estimate from $3.60 to $4.10 and continue to look for $4.85 in 2011.

About The Company: The Boeing Company is a leading manufacturer of commercial jet aircraft. Also produces fighters (F-15, F/A-18), C-17 cargo carrier, V-22 helicopter, E-3 AWACS, E-4 command post, E-6 submarine communicator, ground transportation systems, develops the space station, and does work on the F-22 (ATF). Foreign sales make up a little less than half of the company’s total (42%).


At the time of this article’s writing, the author did not have positions in any of the companies mentioned.