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Will Mixed Product Deliveries Aid Boeing (BA) in Q2 Earnings?

The Boeing Company BA is set to release second-quarter 2022 results on Jul 27, before the opening bell.

In the last reported quarter, the company incurred a loss of $2.75, much wider than the Zacks Consensus Estimate of a loss of 26 cents. Solid commercial deliveries, along with strong aftermarket commercial jet services volume, must have boosted Boeing’s second-quarter earnings performance, amid lower defense deliveries. amid lower defense deliveries.

Will Mixed Product Deliveries Aid Results?

Boeing’s second-quarter deliveries reflected a solid 53.2% surge in commercial shipments from the year-ago reported figure. However, defense shipments declined 7% year over year.

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

For manufacturing companies like Boeing, successful deliveries of finished products play a crucial role in boosting revenue growth. Therefore, such a significant improvement witnessed in the jet maker’s deliveries for its commercial segment is expected to benefit Boeing’s overall second-quarter results.

However, considering the fact that the jet giant’s military business’ revenues comprised almost 43% of total revenues as of 2021-end, while that of the commercial business comprised 31%, the decline in defense shipment might have outweighed the revenue benefits of the solid commercial shipment, thereby hurting the overall Q2 top-line performance.

Expectations for BGS

As far as Boeing Global Services (BGS) unit’s performance in the second quarter is concerned, we remain optimistic.

Notably, a consistent recovery in the commercial aerospace market is expected to have bolstered fleet utilization, thereby once again boosting aftermarket commercial jet services in the second quarter of 2022. This in turn must have added an impetus to the BGS unit’s Q2 revenues.

On the other hand, a favorable mix of products and services is expected to have boosted the operating margin of the BGS unit. This, in turn, must have contributed to its Q2 bottom-line performance.

The Zacks Consensus Estimate for BGS unit revenues, pegged at $4,466 million, indicates an improvement of 9.8% from first-quarter 2021 reported revenues.

The consensus mark for this segment’s earnings is pegged at $633 million, which indicates a solid improvement of 19.2% from second-quarter 2021 reported earnings.

Cash Flow Projections

Improved air travel statistics in recent times, which resulted in higher commercial deliveries, along with higher order receipts as well as increased aftermarket services must have once again contributed favorably to Boeing’s cash flow reserve in the second quarter of 2022. In particular, increased 737 deliveries must have boosted operating cash flow.

Q2 Expectations

Considering the aforementioned discussion, we remain optimistic about BA’s Q2 overall revenue and earnings performance. However, the abnormal costs in relation to the 787 program along with supply chain constraints might have had some adverse impact on the company’s bottom line.

The Zacks Consensus Estimate for Boeing’s total revenues is pegged at $17.74 billion, suggesting a 4.4% improvement from the prior-year reported number. The consensus estimate for the bottom line is pegged at a loss of 8 cents per share, indicating a decline from the year-ago quarter’s earnings of 40 cents.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Boeing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, this is not the case for BA.

Boeing has an Earnings ESP of -62.40% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are three defense companies you may want to consider as these have the right combination of elements to post an earnings beat this season:

L3Harris Technologies LHX: It is scheduled to release its second-quarter results on Jul 28. LHX holds a Zacks Rank #3 and an Earnings ESP of +1.09%. You can see the complete list of today’s Zacks #1 Rank stocks here.

LHX delivered a four-quarter average earnings surprise of 2.32%. The Zacks Consensus Estimate for L3Harris’ second-quarter earnings, pegged at $3.16, has moved up 0.3% over the past seven days.

Triumph Group TGI: It is scheduled to release its first-quarter fiscal 2023 results on Aug 3. TGI holds a Zacks Rank #3 and has an Earnings ESP of +53.33%.

The Zacks Consensus Estimate for Triumph Group’s fiscal first-quarter earnings, pegged at 8 cents, has improved 33.3% over the past 30 days. TGI delivered a four-quarter average earnings surprise of 42%.

CAE Inc CAE: The company is expected to release its fiscal first-quarter results soon. It holds a Zacks Rank #3 and an Earnings ESP of +2.27%.

The Zacks Consensus Estimate for CAE’s fiscal first-quarter earnings, pegged at 18 cents, has remained unchanged over the past seven days. CAE delivered a four-quarter average earnings surprise of 7.67%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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