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Should You Buy Boeing (BA) Stock Ahead of Earnings?
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Shares of Boeing (BA - Free Report) fought to maintain their early gains on Tuesday morning amid market-wide selling linked to 10-year Treasury yields touching 3% for the first time in over four years. But investors seem to be moving on from concerns about a trade war between the U.S. and China, and although interest rate expectations might cause widespread volatility, Boeing should be able to stick out if it can post solid results on Wednesday.
Boeing shares dipped from their late-February highs as investors grew increasingly concerned that the aerospace behemoth could become a target for Chinese retaliation against new U.S. tariffs. However, the company continues to stay busy with new orders, and profit catalysts should help bottom-line growth outpace its solid performance on the top line.
So what exactly should investors expect to see from Boeing on Wednesday morning? Let’s take a closer look.
Latest Outlook and Valuation
Based on our latest Zacks Consensus Estimates, we expect Boeing to report adjusted earnings of $2.59 per share and total revenue of $22.32 billion. These results would represent year-over-year growth rates of 28.9% and 6.4%, respectively.
Just one day out from its report, Boeing is trading at about 22.8x forward 12-month earnings. Over the past year, its Forward P/E has been as high as 30.6 and as low as 18.3. It has traded with a median forward earnings multiple of 23.3x in that time. The company’s industry peers are currently sporting an average Forward P/E of 21.4. In other words, Boeing is trading a slight premium to its industry but well within the valuation range it has witnessed recently.
Earnings ESP Whispers
Investors will also want to anticipate the likelihood that Boeing surprises investors with better-than-anticipated earnings results. For this, we turn to our Earnings ESP figure.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates. This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Boeing is currently holding a Zacks Rank #2 (Buy) and an Earnings ESP of 0.0%. This means that the most recent estimates have been in line with the consensus. In other words, despite its strong Zacks Rank, our model is not conclusively calling for a beat.
Surprise History
Another important thing to consider ahead of Boeing’s report is the company’s history of earnings surprises and the effect that these surprises have had on share prices. Boeing has met or surpassed estimates in each of the trailing seven quarters, but those surprises have not also guaranteed great momentum during earnings season.
We judge the price effect of these earnings beats by comparing the closing price of the stock two days before the report and two days after the report. Over the course of its recent streak, Boeing has moved higher in four of these windows.
Bottom Line
Earnings estimates for Boeing’s soon-to-be-reported quarter have trended higher over recent months, and the stock does not look remarkably overvalued heading into its report date. Meanwhile, EPS and revenue growth should please most investors. Nevertheless, earnings season can be unpredictable, and with other forces weighing on the market as a whole, Boeing may have to blow things out of the water to ensure a post-earnings surge.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.
Image: Bigstock
Should You Buy Boeing (BA) Stock Ahead of Earnings?
Shares of Boeing (BA - Free Report) fought to maintain their early gains on Tuesday morning amid market-wide selling linked to 10-year Treasury yields touching 3% for the first time in over four years. But investors seem to be moving on from concerns about a trade war between the U.S. and China, and although interest rate expectations might cause widespread volatility, Boeing should be able to stick out if it can post solid results on Wednesday.
Boeing shares dipped from their late-February highs as investors grew increasingly concerned that the aerospace behemoth could become a target for Chinese retaliation against new U.S. tariffs. However, the company continues to stay busy with new orders, and profit catalysts should help bottom-line growth outpace its solid performance on the top line.
So what exactly should investors expect to see from Boeing on Wednesday morning? Let’s take a closer look.
Latest Outlook and Valuation
Based on our latest Zacks Consensus Estimates, we expect Boeing to report adjusted earnings of $2.59 per share and total revenue of $22.32 billion. These results would represent year-over-year growth rates of 28.9% and 6.4%, respectively.
Just one day out from its report, Boeing is trading at about 22.8x forward 12-month earnings. Over the past year, its Forward P/E has been as high as 30.6 and as low as 18.3. It has traded with a median forward earnings multiple of 23.3x in that time. The company’s industry peers are currently sporting an average Forward P/E of 21.4. In other words, Boeing is trading a slight premium to its industry but well within the valuation range it has witnessed recently.
Earnings ESP Whispers
Investors will also want to anticipate the likelihood that Boeing surprises investors with better-than-anticipated earnings results. For this, we turn to our Earnings ESP figure.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates. This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Boeing is currently holding a Zacks Rank #2 (Buy) and an Earnings ESP of 0.0%. This means that the most recent estimates have been in line with the consensus. In other words, despite its strong Zacks Rank, our model is not conclusively calling for a beat.
Surprise History
Another important thing to consider ahead of Boeing’s report is the company’s history of earnings surprises and the effect that these surprises have had on share prices. Boeing has met or surpassed estimates in each of the trailing seven quarters, but those surprises have not also guaranteed great momentum during earnings season.
We judge the price effect of these earnings beats by comparing the closing price of the stock two days before the report and two days after the report. Over the course of its recent streak, Boeing has moved higher in four of these windows.
Bottom Line
Earnings estimates for Boeing’s soon-to-be-reported quarter have trended higher over recent months, and the stock does not look remarkably overvalued heading into its report date. Meanwhile, EPS and revenue growth should please most investors. Nevertheless, earnings season can be unpredictable, and with other forces weighing on the market as a whole, Boeing may have to blow things out of the water to ensure a post-earnings surge.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.
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