The Boeing Company BA is set to release second-quarter 2023 results on Jul 26, before the opening bell.
In the last reported quarter, the company incurred a loss of $1.27 per share, which came in much wider than the Zacks Consensus Estimate of a loss of 98 cents. Solid commercial delivery figures, along with robust aftermarket services trend, are likely to have boosted Boeing’s second-quarter earnings. Yet, abnormal costs associated with 787 might adversely impact its overall quarterly results.
Solid Commercial Deliveries to Aid Results
Boeing’s second-quarter deliveries reflect a solid 12.4% surge in commercial shipments from the year-ago quarter’s reported figure. However, defense shipments declined 5% year over year.
For manufacturing companies like Boeing, successful deliveries of finished products play a crucial role in boosting revenue growth. Therefore, such a significant improvement in the jet maker’s deliveries for its commercial segment is expected to benefit its overall second-quarter results.
While the jet giant’s military business revenues accounted for almost 35% of its total revenues as of 2022-end, the commercial business contributed 39%. Therefore, improvement in Boeing’s commercial shipment is likely to have outweighed the decline in defense shipment, thereby aiding its overall top-line performance.
Expectations for BGS
We remain optimistic about Boeing Global Services (BGS) unit’s second-quarter performance.
Notably, steadily growing domestic and international air travel are expected to have bolstered fleet utilization, thereby boosting aftermarket commercial jet services in the second quarter of 2023. Meanwhile all 737 Max operators having returned to flying this jet as of Mar 31, 2023, must have also bolstered aftermarket services revenue for Boeing in the soon to be reported quarter.
This, along with several BA converted freighter and materials management agreements in the recent past, is likely to have added an impetus to BGS’ second-quarter revenues.
The Zacks Consensus Estimate for the unit’s revenues is pegged at $4,571 million, indicating an improvement of 6.4% from the year-ago quarter’s reported number.
The consensus mark for earnings is pinned at $753.7 million, indicating growth of 3.5% from the prior-year quarter’s level.
Cash Flow Projections
Higher jet deliveries, especially that of 737 aircraft in the past couple of quarters, along with the recent strong order activity and increased aftermarket services, are expected to have contributed to Boeing’s second-quarter cash flow reserve.
Q2 Expectations
Considering the aforementioned discussion, we remain optimistic about BA’s overall second-quarter revenue and earnings performance. However, expected abnormal costs in relation to the 787 program, along with periodic expenses, might have had an adverse impact on its bottom line.
The Zacks Consensus Estimate for Boeing’s total revenues is pegged at $18.46 billion, implying a 10.7% improvement from the prior-year period’s reported figure. The bottom-line estimate is pinned at a loss of 99 cents per share, indicating a significant deterioration from the year-ago quarter’s reported loss of 37 cents.
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 -1.45% 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 post earnings beat this reporting cycle.
Huntington Ingalls Industries HII is expected to release second-quarter results on Aug 3. HII has an Earnings ESP of +0.48% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntington Ingalls delivered a four-quarter average earnings surprise of 8.09%. The consensus estimate for its earnings is pegged at $3.14 per share, while that for sales is pinned at $2.73 billion.
L3Harris Technologies LHX is scheduled to release second-quarter results on Jul 26. LHX has an Earnings ESP of +1.67% and a Zacks Rank #3.
L3Harris delivered a four-quarter average negative earnings surprise of 0.37%. The Zacks Consensus Estimate for LHX’s earnings is pegged at $2.91 per share, while that for sales is pinned at $4.34 billion.
Embraer SA ERJ is expected to report second-quarter results on Aug 14. ERJ has an Earnings ESP of +25% and a Zacks Rank #3.
Embraer delivered a four-quarter average negative earnings surprise of 253.33%. The consensus mark for ERJ’s earnings is pegged at 12 cents per share, while that for sales is pinned at $1.16 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
The Boeing Company (BA): Free Stock Analysis Report
Embraer-Empresa Brasileira de Aeronautica (ERJ): Free Stock Analysis Report
Huntington Ingalls Industries, Inc. (HII): Free Stock Analysis Report
L3Harris Technologies Inc (LHX): Free Stock Analysis Report
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