Three’s a charm.
That old maxim held true Wednesday when three of the aerospace industry’s top companies beat Wall Street analysts’ expectations for second-quarter earnings.
Seattle-based
Boeing took Wall Street by surprise reporting that its second-quarter profits rose more than 25 percent, easily beating forecasts of 67 cents a share, according to analysts polled by First Call/Thomson Financial.
Rebounding from a 40-day strike by engineers in the first quarter, the aerospace giant said it earned $654 million, or 75 cents a share, excluding a one-time charge for a planned rocket test, in the three months ended June 30. In the year-earlier period the company earned $520 million, or 56 cents a share, excluding a gain of $181 million from a tax settlement.
Boeing’s revenues fell to $14.8 billion from $14.9 billion, excluding the extraordinary charges.
United Technologies’ second-quarter operating income soared 22 percent, boosted by strong revenue growth at its air-conditioning subsidiary Carrier and its elevator unit Otis.
"These three companies have gotten past the hump. Because aerospace companies are more focused now, we'll continue to see good numbers in the future."
The Hartford, Connecticut-based aerospace and technology giant, a component of the Dow Jones industrial average, reported that income from continuing operations rose 22 percent, or $1.00 per share, to $509 million from $417 million, or 83 cents per share in the same period a year ago.
Analysts were forecasting about a 98-cent-per-share gain, according to First Call/Thomson Financial.
United Technologies’ second-quarter revenues rose 15 percent to $6.96 billion from $6.04 billion in the year-earlier quarter.
Falls Church, Virginia-based General Dynamics said its second-quarter earnings rose 17 percent as a result of sales of its Gulfstream business jets and its Information Systems and Technology group.
The company said it earned $204 million, or $1.01 a share, compared with $175 million, or 86 cents a share, a year earlier. On average, analysts expected the company to earn 98 cents a share, according to First Call/Thomson Financial.
Sales rose 25 percent to $2.62 billion from $2.09 billion.
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Analysts' responses to the earnings reports were upbeat.
"It appears that the problems that aerospace companies have had since the times of mergers and acquisitions has gone away," said analyst Paul Nisbet of JSA Research.
"These three companies have gotten past the hump," said Frank DiBello, managing director of SpaceVest, a Reston, Virginia venture-capital firm specializing in space companies. "Because aerospace companies are more focused now, we’ll continue to see good numbers in the future."
In May, one of the aerospace industry’s top analysts painted a bright outlook for the sector’s future.
Pierre Chao, managing director of Credit Suisse First Boston, said that in terms of total potential, "the industry is significantly undervalued." He predicted that Wall Street’s flagging interest in the industry will likely become more bullish despite the monumental failure of satellite telephone company
Iridium and the repeated earnings missteps of such leaders as Lockheed Martin and Raytheon.
Chao pointed out that aerospace stocks continue to outperform both utility stocks and the broader market.
Spacevest’s DiBello agrees. "This is a time when the aerospace markets are going to improve," he said. "The marketplace is viewing the aerospace industry as pruning themselves very effectively."
At the market close, the Dow Jones industrial average fell 42.84 to 10,696.08. The tech-heavy Nasdaq fell 121.55 to 4,055.62.
Boeing’s shares rose 0.75, or 1.66 percent, to 45.88. General Dynamics closed up 1.06, or 2 percent, to 54.12. And, United Technologies fell 1.50, or 2.54 percent, to 57.50.
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