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Will Higher 737 Max Deliveries Boost Boeing (BA) Q2 Earnings?

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Solid 737 delivery figures may have contributed favorably to The Boeing Company’s (BA - Free Report) commercial business in the second quarter. However, overall second-quarter 2021 results, scheduled for release on Jul 28, may reflect impacts of storage costs for 737 jets.

Click here to know how the company’s overall Q2 performance is expected to have been.

737 Max Remains a Key Catalyst

Since receipt of the U.S. Federal Aviation Administration (FAA) approval for 737 Max’s return to service in November 2020, we have been witnessing a solid ramp up in delivery of Boeing’s 737 jets. Boeing delivered 50 737 jets in the second quarter of 2021, reflecting a massive improvement compared with a mere five units delivered in the year-ago quarter.

In fact, such significant delivery figure of 737 drove a huge surge of 295% in the company’s overall commercial deliveries. This in turn must have contributed favorably to Boeing’s commercial revenues in the soon-to-be-reported quarter.
Currently, the Zacks Consensus Estimate for Boeing’s commercial business segment’s revenues, pegged at $5,738 million, indicates a massive 251% improvement from the year-ago quarter’s reported figure.

The Boeing Company Price and EPS Surprise

The Boeing Company Price and EPS Surprise

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

Earnings Expectation

On the cost front, the company is bound to have incurred significant expenses on account of the huge number of 737 aircraft that are still parked in the company’s storage facilities.

This might have weighed on the company’s commercial bottom-line performance.

However, abnormal production cost related to 737 program has been declining, which in turn must have boosted its second-quarter earnings.

Currently, the Zacks Consensus Estimate for Boeing’s commercial business segment’s revenues, pegged at $5,738 million, indicates a massive 251% improvement from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for its commercial unit is pegged at a loss of $284 million.

What the Zacks Model Unveils

Our proven model does not predict 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 not the case here, as stated below:

Boeing has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

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

Leidos Holdings (LDOS - Free Report) has an Earnings ESP of +4.46% and a Zacks Rank #2.

General Dynamics (GD - Free Report) has an Earnings ESP of +1.98% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

L3Harris Technologies (LHX - Free Report) has an Earnings ESP of +0.43% and a Zacks Rank #3.