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Solid Delivery Numbers to Boost Boeing's (BA) Q1 Earnings

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The Boeing Company (BA - Free Report) is set to release first-quarter 2021 results on Apr 28, before the opening bell.

The company’s four-quarter average negative earnings surprise is 190.80%. Higher deliveries across major segments are expected to have boosted Boeing’s earnings performance in the first quarter.

Improved Deliveries to Aid Results

Boeing’s first-quarter deliveries reflected a noticeable 54% surge in commercial shipments from the year-ago reported figure. Defense shipments also rose 7.7%.

This reflects a generous improvement compared to declining deliveries that this jet maker has been witnessing over the past few quarters. Notably, for manufacturing companies like Boeing, successful deliveries of finished products play a crucial role in boosting revenue growth. Now. considering the fact that the jet maker’s commercial and defense segments together constitute almost 75% of its total revenues, such solid delivery performance makes us optimistic about Boeing’s first-quarter results.  

Such solid delivery figures for Boeing’s commercial and defense segments are expected to have contributed favorably to the operational performance of these business units in the soon-to-be-reported quarter.

The Boeing Company Price and EPS Surprise

The Boeing Company Price and EPS Surprise

The Boeing Company price-eps-surprise | The Boeing Company Quote

 

BGS Segment Expectations

As far as Boeing Global Services (BGS) unit’s performance in the first quarter is concerned, we remain a bit skeptical.  

Though global air travel volume recovered over the past couple of quarters, it remains way behind pre-COVID levels. Consequently, commercial aerospace continued to suffer from restricted air travel, which in turn, must have hampered aftermarket commercial jet services, in the first quarter of 2021. Hence, low commercial service volume is expected to have weighed on BGS unit’s revenues in the yet-to-be-reported quarter.

Moreover, lower commercial service volume along with pre-tax charges related to asset impairments, primarily to reflect the updated fleet retirement assumptions, driven by COVID-19 might have impacted BGS unit’s operating margins, thereby hurting its bottom line.

Consequently, the Zacks Consensus Estimate for BGS unit’s revenues, pegged at $3,650 million, indicates a decline of 21.1% when compared to first-quarter 2020’s revenues. The consensus mark for this segment’s earnings is pegged at $292 million, which indicates a decline of 142.5% from first-quarter 2020.

Other Factors

Although the company has been witnessing a slight uptick in commercial service demand since the fourth quarter of 2020, the disruption caused by COVID-19 on airlines companies and global economy is projected to consistently weigh on Boeing’s cash receipts. Consequently, we expect the company’s balance sheet to reflect poor cash flow figures in the first quarter, driven by lower advanced payment timing and commercial service volume.

Q1 Expectations

Notably, the Zacks Consensus Estimate for total revenues is pegged at $14.38 billion, suggesting 14.9% decline from the prior-year reported number. The consensus estimate for the bottom line is pegged at $1.17 per share, indicating an improvement from the year-ago quarter reported loss of $1.70.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Boeing this time around. Notably, 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. This is the case here, as stated below:

Boeing has an Earnings ESP of +5.55% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some other defense companies you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases:

Moog Inc (MOG.A - Free Report) has an Earnings ESP of +8.41% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

A Recent Defense Release

Lockheed Martin (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%. The bottom line also improved 7.9% from the year-ago quarter’s $6.08.

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