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Higher Commercial Jet Deliveries to Aid Boeing's (BA) Q4 Earnings

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The Boeing Company’s (BA - Free Report) commercial airplane business is expected to have benefited from increased commercial delivery figures and improved quality performance in factories in the fourth quarter of 2023.

However, the company’s fourth-quarter earnings, scheduled for release on Jan 31, are likely to reflect the adverse impact of abnormal costs related to the 777X program and higher research and development (R&D) expenses.

Click here to know how the company’s overall quarterly performance is likely to have been.

Will Improved Jet Deliveries Boost Growth?

Thanks to a steadily growing commercial air traffic (both domestic and international), improved delivery figures for Boeing’s 787 and 767 jets were observed in the soon-to-be-reported quarter. Evidently, the aerospace giant delivered 23 787 Dreamliner jets in the fourth quarter, indicating 4.5% growth from the year-ago period’s reported figure. On the other hand, 767 jets’ delivery reached 15 units in the soon-to-be-reported quarter, up from 12 units recorded in the fourth quarter of 2022.

Its 777 delivery figure also reflected a year-over-year improvement of 50%. The delivery figure for 737 jets remained flat year over year at 110, indicating a major development from a steady decline in deliveries observed in the prior few quarters. 

The Boeing Company Price and EPS Surprise

The Boeing Company Price and EPS Surprise

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

Cumulatively, BA’s fourth-quarter commercial shipments went up 3.3% in the fourth quarter compared with the prior-year quarter’s level.

Such significant delivery figures for its major commercial jetliners thereby boosted overall revenues for Boeing Commercial Airplane (BCA) segment in the to-be-reported quarter.

The fourth-quarter top-line estimate for Boeing’s commercial business segment is pegged at $10,228.7 million, implying a solid 10.9% improvement from the year-ago quarter’s reported figure.

Earnings Expectations

Since the company continues to manufacture its 787 Dreamliner at an abnormally low rate and the production pause for its 777X program is still active, consistent abnormal costs associated with these two jet programs are likely to have adversely impacted the BCA segment’s earnings.  

Further, higher R&D expenditures related to investment in the 777X program in the BCA unit might have hurt the segment’s earnings.

Nevertheless, improving quality performance witnessed within its manufacturing facilities can be expected to have boosted this segment’s operating margin, thereby bolstering earnings performance.

Moreover, the company has been steadily increasing production rates for some of its key commercial programs to meet the growing jet demand. This, in turn, must have bolstered its production efficiency, thereby aiding the segment’s overall operational performance.

Also, consistent cost management efforts by the BCA team are likely to have contributed to this unit’s fourth-quarter bottom-line growth.

The fourth-quarter earnings estimate for BA’s commercial business segment is pegged at a loss of $259.9 million, indicating a significant improvement from the year-ago quarter’s reported loss of $626 million.

What the Zacks Model Unveils

Our proven model conclusively predicts 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. This is the case here, as you will see below.

Boeing has an Earnings ESP of +12.32% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Below are two other defense stocks that also have the right combination of elements to post an earnings beat this time around.

CAE Inc. (CAE - Free Report) is slated to release third-quarter fiscal 2024 results on Feb 14. CAE has an Earnings ESP of +7.18% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

CAE delivered a four-quarter average earnings surprise of 15.97%. The consensus estimate for fiscal third-quarter earnings is pegged at 18 cents per share, while that for sales is pinned at $800.7 million.

Leidos (LDOS - Free Report) is scheduled to release fourth-quarter results on Feb 13. LDOS has an Earnings ESP of +1.88% and a Zacks Rank #1 at present.

Leidos delivered a four-quarter average earnings surprise of 11.51%. The Zacks Consensus Estimate for LDOS’ fourth-quarter earnings is pegged at $1.73 per share, while that for sales is pinned at $3.79 billion.

A Recent Defense Release

RTX Corporation’s (RTX - Free Report) fourth-quarter 2023 adjusted earnings per share (EPS) of $1.29 beat the Zacks Consensus Estimate of $1.25 by 3.2%. The bottom line also improved 1.6% from the year-ago quarter’s level of $1.27.

RTX’s fourth-quarter adjusted sales totaled $19,824 million. The company reported GAAP sales of $19,927 million compared with $18,093 million in the fourth quarter of 2022.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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