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What to Expect from Boeing's (BA) Q1 Earnings Amid 737 MAX Headwinds

Benjamin Rains

Shares of Boeing BA have fallen over 8% since a 737 MAX aircraft was involved in a deadly Ethiopian Airlines crash. The aerospace giant’s stock slipped 1.5% again Wednesday as new reports surfaced that suggest the pilots followed Boeing's emergency steps to combat a sudden downturn of the nose. With that said, until all the information is out, investors might want to simply see what to expect from the company’s upcoming first quarter fiscal 2019 financial results.

Quick Overview

Ethiopian Airlines pilots reportedly initially followed Boeing's emergency procedures for dealing with the sudden downturn of the nose of their plane but were unable to regain control, according to a new Wall Street Journal report. Boeing in a statement asked that people not speculate until the preliminary crash report and flight data from the plane are both released.

What we do know for sure at this point is that a Boeing 737 MAX aircraft crashed shortly after takeoff on March 10 and killed all 157 people on board. Similarities to an October Lion Air crash of the same new Boeing model led to the grounding of all 737 MAX planes.

There is currently an investigation underway into the cause of the accident. And we should note that Boeing has met with American Airlines AAL, Southwest Airlines LUV, United Airlines UAL, and many others in order to review software upgrades and much more. Meanwhile, the 737 MAX fleet remains grounded.

 

 

Outlook & Earnings Trends

Obviously, there is still a ton of uncertainty. But shares of Boeing are up roughly 20% this year to outpace its peer group, which includes European rival Airbus EADSY, Lockheed Martin LMT, Northrop Grumman NOC, and General Dynamics GD. The Chicago-based firm expects to deliver between 895 and 905 new commercial aircraft in 2019 to help it easily top 2018’s previous record of 806.

With that said, our current Zacks Consensus Estimate calls for Boeing’s first quarter 2019 revenue to climb 3.8% to reach $24.27 billion. This would fall far short of Q4’s 14% expansion but Boeing easily surpassed our estimate last quarter. Plus, Boeing’s full-year 2019 revenues are projected to jump 9.5% to $110.70 billion.

At the bottom of the income statement, Boeing’s adjusted Q1 earnings are expected to climb 16.8% to reach $4.25 a share. Peeking further ahead, the company’s Q2 EPS figure is projected to skyrocket 41.4%, with full-year earnings expected to climb 25.6%. On top of that, the chart below shows that Boeing’s earnings estimate revision activity has remained largely positive recently, especially for fiscal 2019 and 2020, despite the headwinds.

 

 

Bottom Line

Boeing is currently a Zacks Rank #1 (Strong Buy) based on its earnings estimate revision trends and also has a strong history of quarterly earnings beats. This includes a 17% average earnings surprise over the trailing four periods. Nonetheless, at this point, some investors might want to wait to buy BA stock until we see how damaging the official report is.

Boeing is scheduled to release its Q1 2019 financial results on April 24.

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