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Will Global Services Unit Hurt Boeing's (BA) Q1 Earnings?
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The Boeing Company (BA - Free Report) is set to release first-quarter 2020 results on Apr 29, before the opening bell.
Lower commercial service volume due to the impact of the 737 MAX grounding is expected to weigh on Boeing’s quarterly results.
Let's take a detailed look at the factors likely to have influenced Boeing’s performance in the first quarter.
Will Poor Deliveries Hurt Q1 Results?
Boeing’s first-quarter deliveries reflected a massive 66.4% year-over-year plunge in commercial shipments. Its defense deliveries also slumped 35% in the soon-to-be-reported quarter.
No doubt, such poor delivery figures have not raised hopes for an optimistic operational performance this time around. The Zacks Consensus Estimate for Boeing’s revenues as well as earnings indicates year-over-year decline.
In February 2020, Boeing announced supply chain agreements at the Singapore Airshow with multiple airlines and operators. This is likely to have boosted the Boeing Global Service (BGS) segment’s order backlog significantly. However,revenues from this unit are expected to reflect lower commercial service volumedue to the impact of the 737 MAX grounding.
The Zacks Consensus Estimate for BGS unit’s first-quarter revenues is pegged at $4.38 billion, suggesting 5.3% decline from the prior-year reported number. The consensus estimate for the unit’s bottom line is pegged at $609 million, indicating 6.7% decline from the prior-year reported number.
In fact, all the major business segments of Boeing are likely to have performed dismally. Particularly, 737 Max grounding and the subsequent halt in production of this program are likely to have taken a toll on its performance. The coronavirus outbreak, which hit the United States, in the latter part of the first quarter, is also expected to have weighed on the company’s overall performance, causing headwinds like delayed deliveries.
Notably, the Zacks Consensus Estimate for total revenues is pegged at $17.17 billion, suggesting 25.1% decline from the prior-year reported number. The consensus estimate for Boeing’s first-quarter earnings is pegged at $2.08 per share, indicating a massive 165.8% decline from the year-ago quarter reported figure.
737 Max Remains a Growth Inhibitor
The 737 Max program continues to be a major headwind for Boeing. The company is expected to have witnessed expenditures on the 737 program in the soon-to-be-reported quarter, despite suspension of production. This is because it is investing in the production system health to de-risk future production rate.
Moreover, lower delivery payments due to fewer 737 deliveries combined with costs for building and storing 737 aircraft are expected to have weighed on Boeing’s operating cash in the to-be-reported quarter. We may expect the company’s balance sheet to duly reflect a poor cash flow figure.
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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some defense companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Curtiss-Wright Corp. (CW - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank #3. The company is scheduled to announce first-quarter 2020 earnings on May 6.
Huntington Ingalls Industries, Inc. (HII - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #3. The company will announce first-quarter 2020 earnings results on May 7.
Northrop Grumman Corp. (NOC - Free Report) has an Earnings ESP of +1.66% and a Zacks Rank #3. The company is set to announce first-quarter 2020 earnings on Apr 29.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Will Global Services Unit Hurt Boeing's (BA) Q1 Earnings?
The Boeing Company (BA - Free Report) is set to release first-quarter 2020 results on Apr 29, before the opening bell.
Lower commercial service volume due to the impact of the 737 MAX grounding is expected to weigh on Boeing’s quarterly results.
Let's take a detailed look at the factors likely to have influenced Boeing’s performance in the first quarter.
Will Poor Deliveries Hurt Q1 Results?
Boeing’s first-quarter deliveries reflected a massive 66.4% year-over-year plunge in commercial shipments. Its defense deliveries also slumped 35% in the soon-to-be-reported quarter.
No doubt, such poor delivery figures have not raised hopes for an optimistic operational performance this time around. The Zacks Consensus Estimate for Boeing’s revenues as well as earnings indicates year-over-year decline.
The Boeing Company Price and EPS Surprise
The Boeing Company price-eps-surprise | The Boeing Company Quote
BGS Unit to Reflect Weakness
In February 2020, Boeing announced supply chain agreements at the Singapore Airshow with multiple airlines and operators. This is likely to have boosted the Boeing Global Service (BGS) segment’s order backlog significantly. However,revenues from this unit are expected to reflect lower commercial service volumedue to the impact of the 737 MAX grounding.
The Zacks Consensus Estimate for BGS unit’s first-quarter revenues is pegged at $4.38 billion, suggesting 5.3% decline from the prior-year reported number. The consensus estimate for the unit’s bottom line is pegged at $609 million, indicating 6.7% decline from the prior-year reported number.
In fact, all the major business segments of Boeing are likely to have performed dismally. Particularly, 737 Max grounding and the subsequent halt in production of this program are likely to have taken a toll on its performance. The coronavirus outbreak, which hit the United States, in the latter part of the first quarter, is also expected to have weighed on the company’s overall performance, causing headwinds like delayed deliveries.
Notably, the Zacks Consensus Estimate for total revenues is pegged at $17.17 billion, suggesting 25.1% decline from the prior-year reported number. The consensus estimate for Boeing’s first-quarter earnings is pegged at $2.08 per share, indicating a massive 165.8% decline from the year-ago quarter reported figure.
737 Max Remains a Growth Inhibitor
The 737 Max program continues to be a major headwind for Boeing. The company is expected to have witnessed expenditures on the 737 program in the soon-to-be-reported quarter, despite suspension of production. This is because it is investing in the production system health to de-risk future production rate.
Moreover, lower delivery payments due to fewer 737 deliveries combined with costs for building and storing 737 aircraft are expected to have weighed on Boeing’s operating cash in the to-be-reported quarter. We may expect the company’s balance sheet to duly reflect a poor cash flow figure.
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. 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 -10.34% and a Zacks Rank #3, which makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are some defense companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Curtiss-Wright Corp. (CW - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank #3. The company is scheduled to announce first-quarter 2020 earnings on May 6.
Huntington Ingalls Industries, Inc. (HII - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #3. The company will announce first-quarter 2020 earnings results on May 7.
Northrop Grumman Corp. (NOC - Free Report) has an Earnings ESP of +1.66% and a Zacks Rank #3. The company is set to announce first-quarter 2020 earnings on Apr 29.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>