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What's in Store for Virgin Galactic's (SPCE) Q1 Earnings?

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Virgin Galactic Holdings, Inc. (SPCE - Free Report) is scheduled to release first-quarter 2021 results on May 4, after market close. In the trailing four quarters, Virgin Galactic came up with a negative earnings surprise of 11.02%, on average.

Let's take a closer look at the factors impacting the company’s upcoming results.

Factors at Play

Virgin Galactic witnessed minimal revenue generation throughout 2020, induced by a shift in focus to execute test-flight programs and ensure safety of its workforce, given the challenges associated with the prolonged COVID-19 pandemic. Consequently, we expect this trend to have continued during the first quarter, impacting the top-line performance.

However, during the third-quarter 2020 earnings call, management confirmed modest revenue expectations related to payloads for the fourth quarter. So, we expect the company’s upcoming results to reflect payload revenue growth on account of such projections.

On the cost side, Virgin Galactic is expected to have incurred escalated expenses in the March quarter due to the unrelenting pandemic impact on its operations. Further, the company has been witnessing a rise in vehicle tooling costs over the past few quarters as it continues to prepare some of its facilities for commercial operations, a trend that most likely continued in the first quarter also.

Moreover, the company has been experiencing ongoing delays in its business and operations, also due to COVID-19, which triggered accumulated impacts on both schedule and cost efficiency, a trend that most likely continued through the first quarter as well.

Consequently, the aforementioned factors might have adversely impacted the company’s bottom-line performance in the soon-to-be-reported quarter. Notably, the Zacks Consensus Estimate for the first quarter is currently pegged at a loss of 31 cents per share, indicating a deterioration from the prior-year quarter’s reported loss.

Toward the end of the first quarter, Virgin Galactic announced a three-year extension to its global partnership with Land Rover. We expect this development to get reflected in the soon-to-be-reported quarter’s results.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Virgin Galactic this time around. The combination of a positive  Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here as explained below.

Earnings ESP: Virgin Galactic has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Virgin Galactic carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Virgin Galactic Holdings, Inc. Price and EPS Surprise

Stocks to Consider

Here are a couple of defense companies worth considering as these have the right combination of elements to beat on earnings in their upcoming releases:

Moog Inc. (MOG.A - Free Report) has an Earnings ESP of +8.41% and a Zacks Rank #2.

Triumph Group, Inc. (TGI - Free Report) has an Earnings ESP of +9.80% and a Zacks Rank of 3.

A Recent Defense Release

Lockheed Martin Corp.  (LMT - Free Report) reported first-quarter 2021 earnings of $6.56 per share, which surpassed the Zacks Consensus Estimate of $6.32 by 3.8%.

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