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Will Lower 737 Deliveries Hurt Boeing's (BA) Q1 Earnings?

Zacks Equity Research

Lower volume of commercial deliveries is expected to hurt revenue growth of The Boeing Company’s BA Commercial Airplanes segment in the first quarter of 2019. The aerospace giant is slated to release quarterly results on Apr 24, before market open.

Poor Delivery Figures

Boeing announced dismal first-quarter 2019 commercial delivery figures on Apr 9. The company delivered 149 airplanes, reflecting a steep decline of 19% year over year and also missed the Zacks Consensus Estimate of 193 airplanes. This underperformance can be primarily attributed to lower demand for 737 jets in the soon-to-be-reported quarter. Moreover, delivery of the single-aisle 737 jets plunged to 89 in the first quarter from 132 a year ago.

Meanwhile, shipments of the 777 and 787 Dreamliners totaled 10 and 36 compared with 12 and 34, respectively, in the year-ago period.

In the commercial jet space, airlines continue to report robust profits and strong passenger traffic. This, in turn, has been benefitting Boeing as it is the largest jet maker in this space. However, drab delivery figures for its flagship commercial fleet of 737 jets, in particular, should be a key inhibitor to its commercial business this time.

On its fourth-quarter earnings call, management announced that it expects relatively light commercial airplane deliveries in the first quarter of 2019, with January projected to witness slow delivery activity.

We expect such headwinds to hurt the top- and bottom-line performance of Boeing’s commercial segment in the soon-to-be-reported quarter.

The Boeing Company Price and EPS Surprise

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

What the Zacks Model Unveils

Our proven model does not conclusively show that Boeing is likely to beat earnings in the first 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. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Boeing has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

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

Raytheon Company RTN is expected to report first-quarter 2019 results on Apr 25. The company has an Earnings ESP of +0.54% and a Zacks Rank #2.

Lockheed Martin Corp. LMT is expected to report first-quarter 2019 results on Apr 23. The company has an Earnings ESP of +4.16% and a Zacks Rank #3.

Huntington Ingalls Industries, Inc. HII is expected to report first-quarter 2019 results on May 2. The company has an Earnings ESP of +1.93% and a Zacks Rank #3.

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Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
The Boeing Company (BA) : Free Stock Analysis Report
 
Raytheon Company (RTN) : Free Stock Analysis Report
 
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