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Will Lower 737 Deliveries Mar Boeing's (BA) Q3 Earnings?

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Will Lower 737 Deliveries Mar Boeing's (BA) Q3 Earnings?

Boeing (BA) announced disappointing third-quarter 2018 commercial delivery figures on Oct 9. This downturn can be primarily attributed to lower demand for 737 jets in the soon-to-be-reported quarter

Lower volume of commercial deliveries may mar revenue growth of The Boeing Company’s BA Commercial Airplanes segment in the third quarter of 2018. The aerospace giant is slated to release quarterly results on Oct 24, before market open.

Poor Deliveries Hurt Outlook

Boeing announced disappointing third-quarter 2018 commercial delivery figures on Oct 9. Notably, the company delivered 190 airplanes, reflecting a decline of 6% year over year. It also missed the Zacks Consensus Estimate of 192. This downturn can be primarily attributed to lower demand for 737 jets in the soon-to-be-reported quarter. Delivery of the single-aisle 737 jet dropped to 138 in the third quarter from 145 a year ago.

Meanwhile, shipments of the 777 and 787 Dreamliners totaled 12 and 34 compared with 16 and 35, respectively, in the year-ago period. Moreover, the company delivered two 747 and four 767 jets compared with four 747 and two 767 jets in the year-ago quarter.

In the commercial jet space, while airlines continue to report robust profits and strong passenger traffic, such a significant decline in Boeing’s third quarter deliveries is expected to hurt the company’s commercial jets’ revenues. Most importantly, poor delivery figures for its flagship commercial fleet of 737, in particular, production rate for which got upgraded to 52 per month starting this June, remains a major cause of concern for analysts.

In line with this, the Zacks Consensus Estimate for the Commercial Airplanes segment’s third-quarter revenues is pegged at $14.6 billion, mirroring a year-over-year decline of 11.1%. Consequently, consensus mark for this segment’s bottom line also reflects a possible deceleration of 4%.

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 shows that Boeing is likely to beat earnings in the third 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. 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 +0.39% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other 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:

L3 Technologies LLL is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +8.05% and a Zacks Rank of 2.

Leidos Holdings LDOS is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +0.37% and a Zacks Rank #3.

Lockheed Martin LMT is expected to report third-quarter 2018 results on Oct 23. The company has an Earnings ESP of +1.56% and a Zacks Rank of 3.

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The Boeing Company (BA) : Free Stock Analysis Report
 
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
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