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Will 787 Delivery Restart Aid Boeing (BA) in Q3 Earnings?

Increased 737 delivery figures and the restart of 787 delivery are expected to have boosted The Boeing Company’s BA commercial business in the third quarter. However, third-quarter 2022 earnings, scheduled for release on Oct 26, are projected to reflect the impacts of abnormal costs related to the 777-9 program.

Click here to know how the company’s overall Q3 performance is expected to have been.

Solid 737 Max Deliveries to Boost Growth

Thanks to steadily recovering air traffic, both domestic and international, improved delivery figures for Boeing’s 737 jets were observed in the third quarter of 2022. Notably, the aerospace giant delivered 88 737 jets in the soon-to-be-reported quarter, reflecting quite a solid improvement of 33.3% from 66 units delivered in the year-ago quarter.

In fact, such significant delivery figures of 737 primarily drove a significant surge of 31.8% in the company’s overall commercial deliveries. This, in turn, must have contributed to Boeing Commercial Airplane (BCA) business segment revenues in the soon-to-be-reported quarter.

The Boeing Company Price and EPS Surprise

The Boeing Company Price and EPS Surprise
The Boeing Company Price and EPS Surprise

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

Moreover, the aerospace giant was able to deliver nine 787 Dreamliner jets in the third quarter of 2022, which reflects a delivery restart considering the fact that the delivery of this product line was nil in the past few quarters. This must have also boosted the top-line performance of the BCA segment.

Currently, the Zacks Consensus Estimate for Boeing’s commercial business segment’s revenues, pegged at $7,176 million, indicates a solid 60.9% improvement from the year-ago quarter’s reported figure.

Earnings Expectation

On the cost front, the delivery restart of the 787 product line is likely to have boosted BCA’s operating profit, thereby adding impetus to its quarterly earnings.

Moreover, improvements in commercial airplanes' financial performance due to increasing 737 MAX deliveries and consistent efforts by the BCA team to manage costs through business transformation activities must have contributed to this unit’s bottom-line growth in the third quarter.

Further, a steady improvement in the company’s expenses is likely to have taken place in relation to the storage of the 737 aircraft as jets stored so long in the inventory are gradually getting delivered.

However, the production pause for the 777-9 program must have once again pushed up costs, which in turn must have weighed on this unit’s Q3 bottom line.

So, the effect of the aforementioned factors on the overall third-quarter earnings performance of the BCA segment seems to have been mixed.

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. This is not the case here.

Boeing has an Earnings ESP of -1,900% 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

Here are two defense companies you may want to consider as these have the right combination of elements to post an earnings beat this season:

Spirit AeroSystems SPR: It is scheduled to release its third-quarter results on Nov 3. SPR has an Earnings ESP of +47.19% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

SPR delivered a four-quarter average negative earnings surprise of 100.31%. The Zacks Consensus Estimate for Spirit AeroSystem’s third-quarter bottom line is pegged at a loss of 39 cents, which implies a solid improvement from a loss of $1.13 incurred in the third quarter of 2021.

Huntington Ingalls Industries HII: It is slated to release its third-quarter results on Nov 3. HII has an Earnings ESP of +0.35% and a Zacks Rank #2.

HII delivered a four-quarter average earnings surprise of 12.38%. The Zacks Consensus Estimate for Huntington’s third-quarter earnings, pegged at $3.53, suggests a decline of 3.3% from the third quarter of 2021.

An Upcoming Defense Earnings

Spire SPIR is slated to report its third-quarter results on Nov 9. It holds a Zacks Rank #2.

The Zacks Consensus Estimate for SPIR’s third-quarter earnings, pegged at a loss of 10 cents, has remained unchanged over the past seven days. SPIR boasts a long-term earnings growth rate of 7.9%.

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

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The Boeing Company (BA) : Free Stock Analysis Report
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Spire Global, Inc. (SPIR) : Free Stock Analysis Report
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