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Boeing (BA) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Leading commercial aircraft manufacturer The Boeing Co. BA is set to release first-quarter 2017 results before the opening bell on Apr 26.

The company posted a positive earnings surprise of 5.56% in the preceding quarter. Moreover, the company surpassed the Zacks Consensus Estimate in three of the past four quarters, with an average beat of 21.42%.

Let’s see how things are shaping up for this announcement.

Factors at Play

During the fourth-quarter earnings call, Boeing had said that considering the current seasonality of its business, it expects revenues in the first quarter to be the lowest of the year, similar to the previous years. The company also estimated earnings per share during the quarter to be approximately 20% of the full-year earnings. Cash flow in the first quarter is forecasted to be near breakeven, due to the timing of receipts and expenditures.

Moreover, Boeing recently reported first-quarter 2017 deliveries, which show that commercial and defense shipments were down 4% and 16%, respectively, on a year-over-year basis. It is the lowest quarterly commercial delivery count in last three years. The company also cited lower demand for its 737 and 777 jets as the reason for the year-over-year decline in first-quarter 2017 commercial deliveries of 169 airplanes. Sequentially, the numbers reflected an 8.6% decline.

Delivery of the single-aisle 737 jet declined to 113 in the first quarter from 121 a year ago. Shipments of the 777 and 787 Dreamliners were 21 and 32 compared with 23 and 30 in the year-ago period, respectively. The company delivered two 767 jets, compared with one in the year-ago quarter. Shipments of 747 remained stable at one year over year.

In the defense and space business, Boeing’s deliveries totaled 42 in the first quarter of 2017, down from 50 a year ago. However, the reported figure was up from 40 in the preceding quarter.

In spite of these circumstances, Boeing still enjoys a steady flow of contracts for both its commercial and defense products. Evidently, during the first quarter, the company received an order for 30 737 MAX 8 airplanes from CDB Aviation Lease Finance, based in Dublin, Ireland. Value of the airplanes at current list prices comes to nearly $3.3 billion. Also, this leading commercial aircraft manufacturer won an order for 39 wide-body airplanes from Singapore Airlines Ltd, valued at nearly $13.8 billion.

Within the defense business, Boeing clinched a modification contract, worth $3.28 billion, from the U.S. Army for supplying lot 7-11 of AH-64E Apache attack helicopters to the government of Saudi Arabia. In addition, it won a modification contract, valued at $2.1 billion, from the U.S. Air Force for the production of KC-46 Lot 3. These contracts should contribute significantly to the company’s top line in the fourth quarter.

Overall, for the first quarter, the Zacks Consensus Estimate for earnings reflects a year-over-year increase of 11.1%; while revenue consensus is pegged at $21.44 billion translating into a 5.3% decline.

Earnings Whispers

Our proven model does not conclusively show that Boeing is likely to beat on earnings this 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. This is not the case here, as you will see below:

Zacks ESP: Boeing has an Earnings ESP of -0.52% as the Most Accurate estimate is pegged at $1.92, while the Zacks Consensus Estimate is a little higher at $1.93. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Boeing’s Zacks Rank #3 when combined with negative ESP, makes surprise prediction difficult for the quarter.

Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

Boeing Company (The) Price and EPS Surprise

 

Boeing Company (The) Price and EPS Surprise | Boeing Company (The) Quote

Stocks that Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Lockheed Martin Corp. LMT is scheduled to report first-quarter 2017 results on Apr 25. The company has an Earnings ESP of +1.83% and a Zacks Rank #2. You can seethe complete list of today’s Zacks #1 Rank stocks here.

Leidos Holdings, Inc. LDOS is scheduled to report first-quarter 2017 results on May 4. The company has an Earnings ESP of +1.28% and a Zacks Rank #2.

Northrop Grumman Corp. NOC is scheduled to report first-quarter 2017 results on Apr 26. The company has an Earnings ESP of +0.35% and a Zacks Rank #2.

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