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Will Lower 777 & 747 Deliveries Hit Boeing (BA) Q2 Earnings?
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With increase in demand for commercial jetliners in domestic and international markets, The Boeing Company’s (BA - Free Report) Commercial Airplanes segment has been receiving incremental contracts regularly for delivering the 737 and 787 jets. We believe the impact of the same to get duly reflected in the company’s second-quarter 2018 results, slated to release on Jul 25, before the market opens.
Solid Deliveries Buoy Optimism
On Jul 10, Boeing announced upbeat second-quarter 2018 commercial delivery figures. Notably, the company delivered 194 airplanes, up 6% year over year. This uptick can be attributed to higher demand for 737 jets. Delivery of the single-aisle 737 jet increased to 137 in the second quarter from 123 a year ago.
Shipments of the 777 and 787 Dreamliners totaled 13 and 38 compared with 21 and 33, respectively, in the year-ago period. Moreover, the company delivered one 747 and five 767 jets compared with three 747 and 767 jets each in the year-ago quarter.
737 — A Major Growth Driver
Demand for Boeing’s commercial airplanes has been on the rise owing to a steady improvement in the passenger and freight traffic. Per Boeing's latest Commercial Market Outlook (CMO), the world will need 42,730 new planes, worth $6.35 trillion, between 2018 and 2037. Keeping up with its usual trend, single-aisle jets are once again expected to be the major demand driver, comprising 73.4% of the total projection.
Interestingly, the company’s 737 model remains one of the best-selling planes in the single-aisle market, courtesy of its fuel efficiency and passenger comfort. In particular, the introduction of the 737 Max model into its production since March 2018 has been driving the demand for 737 fleet lately. Considering this, we expect the 737 jets to act as a key catalyst for Boeing’s second-quarter results for commercial jets.
Keeping its trend intact, Boeing received a number of multi-billion-dollar orders in the second quarter. Majority of these orders came for either 737-Max or 787-Dreamliners. However, the 777-model’s lower delivery rates marred order growth for 737.
In fact, a 38% decline in 777 deliveries in the second quarter, clearly reflects decreased demand for this particular jet. Notably, Boeing implemented a planned production rate decline from 5 per month to 3.5 per month for 777 model in 2018. Also, deliveries for its 747 jets plunged 66.6% in the yet-to-be-reported quarter.
Such significant decline in 777 and 747 deliveries bear every possibility of outweighing the 11.4% improvement in 737 deliveries and might hurt Boeing’s commercial jets’ revenues in the second quarter. In line with this, the Zacks Consensus Estimate for the Commercial Airplanes segment’s revenues is pegged at $14.4 billion for the second quarter, mirroring a year-over-year decline of 9.9%.
What the Zacks Model Unveils
Our proven model does not conclusively show that Boeing is likely to beat earnings in the second quarter. This is because 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. 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 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:
Raytheon Company is expected to report second-quarter 2018 results on Jul 26. The company has an Earnings ESP of +1.10% and a Zacks Rank #2.
Curtiss-Wright (CW - Free Report) is expected to report second-quarter 2018 results on Jul 25. The company has an Earnings ESP of +0.15% and a Zacks Rank of 2.
Embraer (ERJ - Free Report) is expected to report second-quarter 2018 results on Jul 27. The company has an Earnings ESP of +24.59% and a Zacks Rank #3.
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Will Lower 777 & 747 Deliveries Hit Boeing (BA) Q2 Earnings?
With increase in demand for commercial jetliners in domestic and international markets, The Boeing Company’s (BA - Free Report) Commercial Airplanes segment has been receiving incremental contracts regularly for delivering the 737 and 787 jets. We believe the impact of the same to get duly reflected in the company’s second-quarter 2018 results, slated to release on Jul 25, before the market opens.
Solid Deliveries Buoy Optimism
On Jul 10, Boeing announced upbeat second-quarter 2018 commercial delivery figures. Notably, the company delivered 194 airplanes, up 6% year over year. This uptick can be attributed to higher demand for 737 jets. Delivery of the single-aisle 737 jet increased to 137 in the second quarter from 123 a year ago.
Shipments of the 777 and 787 Dreamliners totaled 13 and 38 compared with 21 and 33, respectively, in the year-ago period. Moreover, the company delivered one 747 and five 767 jets compared with three 747 and 767 jets each in the year-ago quarter.
737 — A Major Growth Driver
Demand for Boeing’s commercial airplanes has been on the rise owing to a steady improvement in the passenger and freight traffic. Per Boeing's latest Commercial Market Outlook (CMO), the world will need 42,730 new planes, worth $6.35 trillion, between 2018 and 2037. Keeping up with its usual trend, single-aisle jets are once again expected to be the major demand driver, comprising 73.4% of the total projection.
Interestingly, the company’s 737 model remains one of the best-selling planes in the single-aisle market, courtesy of its fuel efficiency and passenger comfort. In particular, the introduction of the 737 Max model into its production since March 2018 has been driving the demand for 737 fleet lately. Considering this, we expect the 737 jets to act as a key catalyst for Boeing’s second-quarter results for commercial jets.
The Boeing Company Price and EPS Surprise
The Boeing Company Price and EPS Surprise | The Boeing Company Quote
Impact of Other Jet Deliveries
Keeping its trend intact, Boeing received a number of multi-billion-dollar orders in the second quarter. Majority of these orders came for either 737-Max or 787-Dreamliners. However, the 777-model’s lower delivery rates marred order growth for 737.
In fact, a 38% decline in 777 deliveries in the second quarter, clearly reflects decreased demand for this particular jet. Notably, Boeing implemented a planned production rate decline from 5 per month to 3.5 per month for 777 model in 2018. Also, deliveries for its 747 jets plunged 66.6% in the yet-to-be-reported quarter.
Such significant decline in 777 and 747 deliveries bear every possibility of outweighing the 11.4% improvement in 737 deliveries and might hurt Boeing’s commercial jets’ revenues in the second quarter. In line with this, the Zacks Consensus Estimate for the Commercial Airplanes segment’s revenues is pegged at $14.4 billion for the second quarter, mirroring a year-over-year decline of 9.9%.
What the Zacks Model Unveils
Our proven model does not conclusively show that Boeing is likely to beat earnings in the second quarter. This is because 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. 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 0.00% 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 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:
Raytheon Company is expected to report second-quarter 2018 results on Jul 26. The company has an Earnings ESP of +1.10% and a Zacks Rank #2.
Curtiss-Wright (CW - Free Report) is expected to report second-quarter 2018 results on Jul 25. The company has an Earnings ESP of +0.15% and a Zacks Rank of 2.
Embraer (ERJ - Free Report) is expected to report second-quarter 2018 results on Jul 27. The company has an Earnings ESP of +24.59% and a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>