Leading commercial aircraft manufacturer The Boeing Co. (BA Quick QuoteBA - Free Report) is set to release third-quarter 2016 results before the opening bell on Oct 26.

The company posted a positive earnings surprise of 50.00% in the preceding quarter. Moreover, the company surpassed the Zacks Consensus Estimate in three of the past four quarters, with an average beat of 19.54%.

Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Boeing is likely to beat earnings this season because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates, and Boeing has the right mix.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +0.38%. This is because the Most Accurate estimate stands at $2.64, while the Zacks Consensus Estimate is pegged slightly lower at $2.63. This is a meaningful indicator of a likely positive earnings surprise.

Zacks Rank: Boeing’s Zacks Rank #3, when combined with a positive ESP, makes us reasonably confident of an earnings beat this quarter.

Conversely, Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Factors at Play

This appears to be a difficult year for the aerospace giant. Stepping into its 100th year of business, Boeing has incidentally recorded a year-to-date drop of 6.1% in its share price. The company recently reported a 5.5% decline in its commercial deliveries during the quarter to 188 airplanes due to sluggish demand for the 737, 777 and 787 Dreamliners.

However, the defense business remained solid. Deliveries at Boeing’s defense and space business totaled 50 in the third quarter, up from 48 a year ago and 45 in the preceding quarter.

Boeing enjoys a steady flow of contracts for both its commercial and defense products. During the third quarter, the company sold 28 wide-body jets, worth $8.0 billion, to Saudi Arabian Airlines. Moreover, it received an order from Malaysia Airlines Berhad for 25 737 MAX 8 airplanes, valued at $2.75 billion. Within the defense business, Boeing clinched a $2.8 billion contract from the U.S. Air Force for the first lot of 19 KC-46 Pegasus aerial tankers. In addition, its unit won a foreign military sales contract worth $700 million from the Pentagon. These contracts will contribute significantly to the company’s top line during the quarter.

Overall, for the third quarter, the Zacks Consensus Estimate for earnings stands at $2.63, reflecting a year-over-year increase of 4.4%; while that for revenues is pegged at $23.42 billion, translating into a 9.4% decline.

Other Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Triumph Group, Inc. (TGI Quick QuoteTGI - Free Report) is scheduled to report third-quarter 2016 results on Nov 3. The company has an Earnings ESP of +7.96% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Embraer S.A. (ERJ Quick QuoteERJ - Free Report) has an Earnings ESP of +7.14% and a Zacks Rank #3. The company is scheduled to report third-quarter 2016 results on Oct 31.

L-3 Communications Holdings Inc. has an Earnings ESP of +2.75% and a Zacks Rank #3. The company is scheduled to report third-quarter 2016 results on Oct 27.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>