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The Zacks Analyst Blog Highlights: Boeing, Leidos, Curtiss-Wright and Triumph Group

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Zacks Equity Research
·6 min read
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For Immediate Release

Chicago, IL – January 26, 2021 – 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: The Boeing Company BA, Leidos Holdings, Inc. LDOS, Curtiss-Wright Corporation CW and Triumph Group, Inc. TGI.

Here are highlights from Monday’s Analyst Blog:

Will Dismal 787 Deliveries Drag Down Bowing's (BA) Q4 Earnings?

Dismal 787 delivery figures along with rising severance and storage costs are expected to have weighed on The Boeing Company’s commercial business in the fourth quarter. The coronavirus pandemic impact can be identified as a major growth inhibitor for the unit.

Scheduled for release on Jan 27, Boeing’s fourth-quarter 2020 results are likely to reflect these factors.

Click here to know how the company’s overall Q4 performance is expected to have been.

Did 737 Max Hurt Q4 Results?

Boeing’s 737 Max program received the approval from the U.S. Federal Aviation Administration (FAA) to return to service at the end of November 2020. Consequently, the company was able to deliver 31 units of its single-aisle 737 jets compared to nine units delivered in the fourth quarter of 2019. This must have boosted its commercial revenues to some extent.

However, the company is bound to have incurred significant expenses on account of the huge number of 737 aircraft that are still parked in the company’s storage facilities. This must have weighed on the company’s commercial bottom-line performance.

Poor 787 Deliveries

Apart from 737, deliveries of other commercial products of Boeing remained unimpressive during the fourth quarter, declining 25.3% year over year. In particular, the aircraft giant could deliver only 59 airplanes in the soon-to-be-reported quarter, primarily due to dismal 787 Dreamliner jets. This dragged down overall commercial delivery figures, likely affecting its commercial segment’s top line in the soon-to-be-reported quarter.

The recovery observed in global air traffic was not enough to offset the impact of reduced demand, which touched rock bottom. In fact, this has forced the company to consolidate its manufacturing facilities for the 787 program in recent times, with a large number of Dreamliners stranded in its inventory.

Moreover, some quality control problems associated with the manufacturing of 787 jets have been affecting delivery at this product line. Similar issues are expected to have weighed on the company’s commercial business unit’s Q4 performance.

Currently, the Zacks Consensus Estimate for Boeing’s commercial business segment’s revenues, pegged at $4,679 million, indicates 37.3% decline year over year.

Abnormal Production Cost Woes

In light of the ongoing crisis situation, Boeing decided to reduce the production rates of several of its commercial airplane programs. As the company continues to produce at abnormally low production rates, it expects to incur approximately $5 billion of abnormal production costs, of which it already incurred $2.1 billion as of Sep 30, 2020. We expect the company to have incurred similar notable abnormal production costs in the fourth quarter as well, which may have hurt its earnings from commercial business.

Also, Boeing has been incurring notable severance costs on account of employees leaving due to the pandemic impact. With additional approximate 7,000 employees expected to leave the company through the end of 2021, Boeing must have incurred significant severance costs in the fourth quarter. Further, storage of a large number of finished 787 jets must have pushed up the company’s expenses for storage, thus dragging down its commercial unit’s earnings.

Currently, the Zacks Consensus Estimate for its commercial unit is pegged at a loss of $689 million.

What the Zacks Model Unveils

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise.

Boeing has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some defense companies you may want to consider as these have the right combination of elements to post an earnings beat in their upcoming releases:

Leidos Holdings has an Earnings ESP of +6.79% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Curtiss-Wright has an Earnings ESP of +1.50% and a Zacks Rank of 3.

Triumph Group has an Earnings ESP of +7.14% and a Zacks Rank of 2.

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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/performancefor information about the performance numbers displayed in this press release.


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The Boeing Company (BA) : Free Stock Analysis Report
 
Triumph Group, Inc. (TGI) : Free Stock Analysis Report
 
CurtissWright Corporation (CW) : Free Stock Analysis Report
 
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
 
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