Boeing’s Defense Business Gets a Welcome Hand From Pentagon
In a research note authored before Boeing’s (NYSE:BA) third-quarter earnings report was released, RBC Capital Markets analyst Robert Stallard wrote that the “impact of the sequester” on the company’s defense business “is likely to remain muted until next year.”
Despite the airline manufacturer reporting that quarterly profit soared 12 percent from the year-ago quarter, the strength of the commercial airplane business was forced to compensate for weakness in the defense unit, where revenue edged up just 3 percent while margins contracted and profit fell. In particular, the company’s defense operations were impacted by declining government spending and a large charge Boeing incurred from closing the C-17 transport plane production-line.
But still, as Boeing’s third-quarter top-line results made clear, the biggest federal government defense contractors are surviving the spending cuts. Both Lockheed Martin (NYSE:LMT), the largest of the government’s contractors, and Northrop Grumman (NYSE:NOC) reported earnings that beat analysts’ estimates even though sales dipped.