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Will Commercial Margin Growth Aid Boeing's (BA) Q3 Earnings?
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The Boeing Company (BA - Free Report) is set to release third-quarter 2018 results on Oct 24, before the opening bell. Lower deliveries may hamper revenue growth. However, order growth remains solid in the quarter.
Let's take a detailed look at the factors influencing Boeing’s quarterly results.
Multiple Contract Wins: Solid Backlog
Boeing is the largest aircraft manufacturer and one of the major aerospace and defense contractors in the United States. Therefore, it enjoys a solid inflow of contracts from both the Pentagon as well as foreign allies, courtesy of the company’s varied product offerings.
Among the commercial contracts that Boeing won in the third quarter, the significant ones include a $9.6-billion order for delivering 75 737 MAX 8s, three 787-9 Dreamliners to Air Lease Corporation and an $8.6-billion order for supplying 75 of its 737 MAX 8 aircraft to Jet Airways.
In the defense space, the company clinched a contract worth $9.2 billion for delivering Advanced Pilot Training aircraft and ground-based training systems and a $2.9 billion contract for the production of the fourth lot of KC-46 aircraft, spares and support equipment. The company also won a few more multi-million-dollar contracts from the Pentagon.
Such solid order growth must have boosted Boeing’s backlog count, which should get duly reflected in the upcoming quarterly results.
Lower Deliveries & Top-Line Expectations
Boeing’s third-quarter deliveries reflected a 6% year-over-year decline in commercial shipments. On the other hand, defense shipments declined a havoc 43.2% from the year-ago figure.
Such lower deliveries tend to drag down a company’s quarterly sales. Evidently, the Zacks Consensus Estimate for Boeing’s third-quarter sales, pegged at $23.7 billion, reflects a year-over-year decrease of 2.4%.
Bottom-Line Expectations
On the second-quarter earnings call, the company expressed concerns about the growing cost for the KC-46A Tanker program. This in turn may weigh on Boeing’s third-quarter earnings growth.
However, considering the fact that the company raised its full-year operating margin for the commercial business, we may expect this margin growth to outweigh the increased cost and thereby boost Boeing’s bottom line. To this end, the consensus estimate for the company’s third-quarter earnings is pegged at $3.45 per share, reflecting a solid year-over-year increase of 26.8%.
What the Zacks Model Unveils
Our proven model shows that Boeing is likely to beat on earnings this quarter. Notably a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen and Boeing possess both. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks That Warrant a Look
Here are some companies in the Zacks-Aerospace sector that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
L3 Technologies is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +12.13% and a Zacks Rank of 2.
Leidos Holdings (LDOS - Free Report) is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +0.37% and a Zacks Rank #3.
Lockheed Martin (LMT - Free Report) is expected to report third-quarter 2018 results on Oct 23. The company has an Earnings ESP of +1.56% and a Zacks Rank of 3.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Will Commercial Margin Growth Aid Boeing's (BA) Q3 Earnings?
The Boeing Company (BA - Free Report) is set to release third-quarter 2018 results on Oct 24, before the opening bell. Lower deliveries may hamper revenue growth. However, order growth remains solid in the quarter.
Let's take a detailed look at the factors influencing Boeing’s quarterly results.
Multiple Contract Wins: Solid Backlog
Boeing is the largest aircraft manufacturer and one of the major aerospace and defense contractors in the United States. Therefore, it enjoys a solid inflow of contracts from both the Pentagon as well as foreign allies, courtesy of the company’s varied product offerings.
Among the commercial contracts that Boeing won in the third quarter, the significant ones include a $9.6-billion order for delivering 75 737 MAX 8s, three 787-9 Dreamliners to Air Lease Corporation and an $8.6-billion order for supplying 75 of its 737 MAX 8 aircraft to Jet Airways.
The Boeing Company Price and EPS Surprise
The Boeing Company Price and EPS Surprise | The Boeing Company Quote
In the defense space, the company clinched a contract worth $9.2 billion for delivering Advanced Pilot Training aircraft and ground-based training systems and a $2.9 billion contract for the production of the fourth lot of KC-46 aircraft, spares and support equipment. The company also won a few more multi-million-dollar contracts from the Pentagon.
Such solid order growth must have boosted Boeing’s backlog count, which should get duly reflected in the upcoming quarterly results.
Lower Deliveries & Top-Line Expectations
Boeing’s third-quarter deliveries reflected a 6% year-over-year decline in commercial shipments. On the other hand, defense shipments declined a havoc 43.2% from the year-ago figure.
Such lower deliveries tend to drag down a company’s quarterly sales. Evidently, the Zacks Consensus Estimate for Boeing’s third-quarter sales, pegged at $23.7 billion, reflects a year-over-year decrease of 2.4%.
Bottom-Line Expectations
On the second-quarter earnings call, the company expressed concerns about the growing cost for the KC-46A Tanker program. This in turn may weigh on Boeing’s third-quarter earnings growth.
However, considering the fact that the company raised its full-year operating margin for the commercial business, we may expect this margin growth to outweigh the increased cost and thereby boost Boeing’s bottom line. To this end, the consensus estimate for the company’s third-quarter earnings is pegged at $3.45 per share, reflecting a solid year-over-year increase of 26.8%.
What the Zacks Model Unveils
Our proven model shows that Boeing is likely to beat on earnings this quarter. Notably a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen and Boeing possess both. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Boeing has an Earnings ESP of +0.39% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks That Warrant a Look
Here are some companies in the Zacks-Aerospace sector that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
L3 Technologies is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +12.13% and a Zacks Rank of 2.
Leidos Holdings (LDOS - Free Report) is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +0.37% and a Zacks Rank #3.
Lockheed Martin (LMT - Free Report) is expected to report third-quarter 2018 results on Oct 23. The company has an Earnings ESP of +1.56% and a Zacks Rank of 3.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>