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Will Abnormal 787 Costs Hurt Boeing (BA) in Q1 Earnings?
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The Boeing Company (BA - Free Report) is set to release first-quarter 2023 results on Apr 26, before the opening bell.
In the last reported quarter, the company incurred a loss of $1.75 per share, which came in much wider than the Zacks Consensus Estimate of earnings of 5 cents. Solid delivery figures, both commercial and defense, along with robust aftermarket services trend, must have boosted Boeing’s first-quarter earnings performance. Yet, abnormal costs associated with 787 might adversely impact its overall first-quarter results.
Solid Product Deliveries to Aid Results
Boeing’s first-quarter deliveries reflect a solid 36.8% surge in commercial shipments from the year-ago reported figure. Defense shipments have also increased 2.4% year over year.
The jet giant’s military and commercial business revenues comprised almost 35% and 39% of its total revenues (as of 2021-end), respectively, thereby together constituting almost 75% of its total revenues.
For manufacturing companies like Boeing, successful deliveries of finished products play a crucial role in boosting its revenue growth. Therefore, such a significant improvement witnessed in the jet maker’s deliveries for both its commercial and defense segments is expected to benefit Boeing’s overall first-quarter results.
As far as Boeing Global Services (BGS) unit’s first-quarter performance is concerned, we remain optimistic.
Notably, a steady growth observed in both domestic and international air travel recently are expected to have bolstered fleet utilization, thereby once again boosting aftermarket commercial jet services in the first quarter of 2023. Meanwhile with 737 Max having returned to China in the fourth quarter of 2022 must have also ushered in some aftermarket services contract for Boeing in the soon to be reported quarter.
This, as well as a robust cargo market with several Boeing converted freighter and materials management agreements, is likely to have added an impetus to BGS’ first-quarter revenues.
The Zacks Consensus Estimate for the unit’s revenues is pegged at $4,503 million, indicating an improvement of 4.4% from the year-ago reported number. The same for its earnings is pegged at $639 million, indicating growth of 7.9% from the prior-year quarter.
Cash Flow Projections
Higher jet deliveries, especially that of 737 aircraft, along with the recent strong order activity and increased aftermarket services, are expected to have contributed to Boeing’s cash flow reserve.
Q1 Expectations
Considering the aforementioned discussion, we remain optimistic about BA’s overall first-quarter revenue and earnings performance. However, abnormal costs in relation to the 787 program, along with periodic expenses, might adversely impact its bottom-line performance.
The Zacks Consensus Estimate for Boeing’s total revenues is pegged at $17.36 billion, implying a 24.1% improvement from the prior-year reported figure. The bottom line estimate is pinned at a loss of 98 cents per share, indicating a significant improvement from the year-ago quarter’s loss of $2.75 per share.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Boeing this time around. 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. However, this is not the case for BA.
Boeing has an Earnings ESP of -7.50% 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
Below are three defense stocks that have the right combination of elements to come up with an earnings beat this reporting cycle:
Spirit AeroSystems delivered a four-quarter average negative earnings surprise of 157.65%. The bottom-line estimate for SPR is pegged at a loss of 31 cents, indicating a deterioration from the prior-year quarter’s earnings of 3 cents per share.
Embraer (ERJ - Free Report) : The company is scheduled to release first-quarter results on May 3. ERJ has an Earnings ESP of +116.67% and a Zacks Rank #3.
Embraer delivered a four-quarter average earnings surprise of 105.32%. The bottom-line estimate for ERJ is pegged at a loss of 3 cents per share, indicating an improvement from the year-ago quarter’s loss of 43 cents per share.
CAE Inc. (CAE - Free Report) is expected to report first-quarter results soon. CAE has an Earnings ESP of +3.85% and a Zacks Rank #3.
CAE delivered a four-quarter average negative earnings surprise of 2.23%. The consensus estimate for CAE’s first-quarter earnings is pegged at 26 cents per share, indicating an improvement of 13% from the prior-year quarter.
Image: Bigstock
Will Abnormal 787 Costs Hurt Boeing (BA) in Q1 Earnings?
The Boeing Company (BA - Free Report) is set to release first-quarter 2023 results on Apr 26, before the opening bell.
In the last reported quarter, the company incurred a loss of $1.75 per share, which came in much wider than the Zacks Consensus Estimate of earnings of 5 cents. Solid delivery figures, both commercial and defense, along with robust aftermarket services trend, must have boosted Boeing’s first-quarter earnings performance. Yet, abnormal costs associated with 787 might adversely impact its overall first-quarter results.
Solid Product Deliveries to Aid Results
Boeing’s first-quarter deliveries reflect a solid 36.8% surge in commercial shipments from the year-ago reported figure. Defense shipments have also increased 2.4% year over year.
The jet giant’s military and commercial business revenues comprised almost 35% and 39% of its total revenues (as of 2021-end), respectively, thereby together constituting almost 75% of its total revenues.
For manufacturing companies like Boeing, successful deliveries of finished products play a crucial role in boosting its revenue growth. Therefore, such a significant improvement witnessed in the jet maker’s deliveries for both its commercial and defense segments is expected to benefit Boeing’s overall first-quarter results.
The Boeing Company Price and EPS Surprise
The Boeing Company price-eps-surprise | The Boeing Company Quote
Expectations for BGS
As far as Boeing Global Services (BGS) unit’s first-quarter performance is concerned, we remain optimistic.
Notably, a steady growth observed in both domestic and international air travel recently are expected to have bolstered fleet utilization, thereby once again boosting aftermarket commercial jet services in the first quarter of 2023. Meanwhile with 737 Max having returned to China in the fourth quarter of 2022 must have also ushered in some aftermarket services contract for Boeing in the soon to be reported quarter.
This, as well as a robust cargo market with several Boeing converted freighter and materials management agreements, is likely to have added an impetus to BGS’ first-quarter revenues.
The Zacks Consensus Estimate for the unit’s revenues is pegged at $4,503 million, indicating an improvement of 4.4% from the year-ago reported number.
The same for its earnings is pegged at $639 million, indicating growth of 7.9% from the prior-year quarter.
Cash Flow Projections
Higher jet deliveries, especially that of 737 aircraft, along with the recent strong order activity and increased aftermarket services, are expected to have contributed to Boeing’s cash flow reserve.
Q1 Expectations
Considering the aforementioned discussion, we remain optimistic about BA’s overall first-quarter revenue and earnings performance. However, abnormal costs in relation to the 787 program, along with periodic expenses, might adversely impact its bottom-line performance.
The Zacks Consensus Estimate for Boeing’s total revenues is pegged at $17.36 billion, implying a 24.1% improvement from the prior-year reported figure. The bottom line estimate is pinned at a loss of 98 cents per share, indicating a significant improvement from the year-ago quarter’s loss of $2.75 per share.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Boeing this time around. 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. However, this is not the case for BA.
Boeing has an Earnings ESP of -7.50% 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
Below are three defense stocks that have the right combination of elements to come up with an earnings beat this reporting cycle:
Spirit AeroSystems (SPR - Free Report) : The company is expected to release first-quarter results on May 3. SPR has an Earnings ESP of +16.58% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Spirit AeroSystems delivered a four-quarter average negative earnings surprise of 157.65%. The bottom-line estimate for SPR is pegged at a loss of 31 cents, indicating a deterioration from the prior-year quarter’s earnings of 3 cents per share.
Embraer (ERJ - Free Report) : The company is scheduled to release first-quarter results on May 3. ERJ has an Earnings ESP of +116.67% and a Zacks Rank #3.
Embraer delivered a four-quarter average earnings surprise of 105.32%. The bottom-line estimate for ERJ is pegged at a loss of 3 cents per share, indicating an improvement from the year-ago quarter’s loss of 43 cents per share.
CAE Inc. (CAE - Free Report) is expected to report first-quarter results soon. CAE has an Earnings ESP of +3.85% and a Zacks Rank #3.
CAE delivered a four-quarter average negative earnings surprise of 2.23%. The consensus estimate for CAE’s first-quarter earnings is pegged at 26 cents per share, indicating an improvement of 13% from the prior-year quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.