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The Zacks Analyst Blog Highlights: Boeing, L3, Leidos and Lockheed

Zacks Equity Research
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For Immediate Release

Chicago, IL –October 22, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Boeing Company BA, L3 Technologies LLL, Leidos Holdings LDOS and Lockheed Martin LMT.

Here are highlights from Friday’s Analyst Blog:

Will Commercial Margin Growth Aid Boeing’s Q3 Earnings?

The Boeing Company is set to release third-quarter 2018 results on Oct 24, before the opening bell. Lower deliveries may hamper revenue growth. However, order growth remains solid in the quarter.

Let's take a detailed look at the factors influencing Boeing’s quarterly results.

Multiple Contract Wins: Solid Backlog

Boeing is the largest aircraft manufacturer and one of the major aerospace and defense contractors in the United States. Therefore, it enjoys a solid inflow of contracts from both the Pentagon as well as foreign allies, courtesy of the company’s varied product offerings.

Among the commercial contracts that Boeing won in the third quarter, the significant ones include a $9.6-billion order for delivering 75 737 MAX 8s, three 787-9 Dreamliners to Air Lease Corporation and an $8.6-billion order for supplying 75 of its 737 MAX 8 aircraft to Jet Airways.

In the defense space, the company clinched a contract worth $9.2 billion for delivering Advanced Pilot Training aircraft and ground-based training systems and a $2.9 billion contract for the production of the fourth lot of KC-46 aircraft, spares and support equipment. The company also won a few more multi-million-dollar contracts from the Pentagon.

Such solid order growth must have boosted Boeing’s backlog count, which should get duly reflected in the upcoming quarterly results.

Lower Deliveries & Top-Line Expectations


Boeing’s third-quarter deliveries reflected a 6% year-over-year decline in commercial shipments. On the other hand, defense shipments declined a havoc 43.2% from the year-ago figure.

Such lower deliveries tend to drag down a company’s quarterly sales. Evidently, the Zacks Consensus Estimate for Boeing’s third-quarter sales, pegged at $23.7 billion, reflects a year-over-year decrease of 2.4%.

Bottom-Line Expectations

On the second-quarter earnings call, the company expressed concerns about the growing cost for the KC-46A Tanker program. This in turn may weigh on Boeing’s third-quarter earnings growth.

However, considering the fact that the company raised its full-year operating margin for the commercial business, we may expect this margin growth to outweigh the increased cost and thereby boost Boeing’s bottom line. To this end, the consensus estimate for the company’s third-quarter earnings is pegged at $3.45 per share, reflecting a solid year-over-year increase of 26.8%. 

What the Zacks Model Unveils

Our proven model shows that Boeing is likely to beat on earnings this quarter. Notably 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 and Boeing possess both. 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 Zacks-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 is expected to report third-quarter 2018 results on Oct 25. The company has an Earnings ESP of +12.13% and a Zacks Rank of 2.

Leidos Holdings 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 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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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
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