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Aerospace Stocks' Q1 Earnings Due on Apr 28: BA, GD & TDY

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·6 min read
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The first-quarter earnings season for Aerospace stocks kick-started with Lockheed Martin LMT and Hexcel HXL reporting their quarterly figures on Apr 20. Impressively, both these stocks came up with better-than-expected bottom-line performance. Looking ahead, a handful of major Aerospace players are set to reveal their Q1 numbers this week.

Factors that Influenced Aerospace Players

Though a recovery in global air traffic has been observed, the pace of the recovery has been slow and not anywhere near the pre-pandemic levels. The commercial section of the Aerospace sector continued to suffer in the first quarter 2021 on account of COVID-19 induced impacts on air travel. Notably, both Boeing and Airbus EADSY — that together constitute more than 90% of commercial aircraft space — reported significant loss during the last year on account of COVID impacts on commercial aerospace and the trend is likely to have remained unchanged in the first quarter. This might have dragged down revenues and earnings of aerospace stocks, especially those which have a strong presence in the commercial space.

On a brighter note, we expect the stocks that are more focused on the combat side of the sector to be better off as they remained cushioned by steady government support. In fact, we did witness a handful of such stocks securing significant contracts from Pentagon during the first quarter. This must have boosted their top-line performance.

Nevertheless, the pandemic is expected to have affected defense-centric stocks’ quarterly performance as they continue to incur expenses for storage of finished products in storage facilities and warehouses. This is because timely delivery of all products was not possible due to stringent business restrictions in some parts of the world along with cash crunch. Such expenses might have had an adverse impact on the bottom-line performance of these stocks.

Considering the aforementioned factors, we remain a bit skeptical about the overall performance of aerospace stocks in Q1.

Q1 Projections

Aerospace sector Q1 earnings are expected to remain flat year over year while revenues are projected to be down 5.6%.

For more details on quarterly releases, you can go through the latest Earnings Preview.

Defense Stocks to Watch

Let's take a look at three defense companies that are scheduled to report first-quarter 2021 earnings on Apr 28 and find out how things have shaped up prior to the announcements.

The Boeing Company’s BA first-quarter deliveries reflected a solid 54% surge in commercial shipments from the year-ago reported figure. Defense shipments rose 7.7%. Such improved delivery performance is expected to have contributed favorably to Boeing’s results this time around.

However, low commercial service volume is expected to have weighed on Boeing Global Services (BGS) unit’s revenues in the yet-to-be-reported quarter. Moreover, impact of the disruption caused by COVID-19 on airlines companies and global economy is projected to have consistently weighed on Boeing’s cash receipts. Consequently, we expect the company’s first-quarter balance sheet to reflect poor cash flow figures, driven by lower advanced payment timing and commercial service volume (read more: Solid Delivery Numbers to Boost Boeing's Q1 Earnings).

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boeing has an Earnings ESP of +5.55% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

General Dynamics’ GD Q1 results are expected to reflect optimistic top-line performance in the majority of its segments. In particular, slowly recovering air traffic figures are expected to have boosted delivery figures for the company’s Aerospace unit in the soon-to-be-reported quarter.

On the other hand, Marine Systems unit is expected to have witnessed revenue growth on expanding demand for submarines, surface combat, and support ships, and other overhaul work . However, increased work getting executed on the first two cost-plus Columbia submarines might have led to escalated costs, which in turn is expected to have dragged down the company’s first-quarter bottom line.

General Dynamics currently has an Earnings ESP of -0.25% and a Zacks Rank #3 (read more: Will Segmental Performance Aid General Dynamics Q1 Earnings?).

General Dynamics Corporation Price and EPS Surprise

General Dynamics Corporation Price and EPS Surprise
General Dynamics Corporation Price and EPS Surprise

General Dynamics Corporation price-eps-surprise | General Dynamics Corporation Quote

Teledyne Technologies’ TDY Q1 results are expected to reflect dismal quarterly performance with the company likely to have witnessed declines in surgery and cancer radiotherapy sales and reduced OEM equipment installations, on account of the COVID-19 impacts.

Nevertheless, aggressive cost-management initiative followed by the company is expected to have benefited its bottom-line performance in the soon-to-be-reported quarter.

Teledyne currently has an Earnings ESP of 0.00% and a Zacks Rank #3 (read more: What Awaits Teledyne Technologies in Q1 Earnings?).

Teledyne Technologies Incorporated Price and EPS Surprise

Teledyne Technologies Incorporated Price and EPS Surprise
Teledyne Technologies Incorporated Price and EPS Surprise

Teledyne Technologies Incorporated price-eps-surprise | Teledyne Technologies Incorporated Quote

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The Boeing Company (BA) : Free Stock Analysis Report

General Dynamics Corporation (GD) : Free Stock Analysis Report

Lockheed Martin Corporation (LMT) : Free Stock Analysis Report

Airbus Group (EADSY) : Free Stock Analysis Report

Hexcel Corporation (HXL) : Free Stock Analysis Report

Teledyne Technologies Incorporated (TDY) : Free Stock Analysis Report

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