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Higher Commercial Deliveries to Aid Boeing (BA) Q3 Earnings

Boeing's (BA) Q3 results are expected to benefit from increased 737 deliveries along with reduced expenditures on lower wide-body production rates

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This story originally appeared on Zacks

The Boeing Company BA is set to release third-quarter 2021 results on Oct 27, before the opening bell.

- Zacks

In the last reported quarter, the company delivered an earnings surprise of 161.54%. Massive commercial deliveries might have offset unchanged defense deliveries, which, in turn, are  expected to have boosted Boeing’s performance in the third quarter.

Solid Commercial Deliveries to Aid Results

Boeing’s third-quarter deliveries reflected a massive 204% surge in commercial shipments from the year-ago reported figure. Defense shipments, however, remained flat.

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 commercial deliveries is expected to have offset unchanged defense deliveries, thereby making us optimistic about Boeing’s overall third-quarter results.

We expect the aforementioned delivery figures for Boeing’s commercial and defense segments to have contributed to the operational performance of the respective business units in the soon-to-be-reported quarter.

The Boeing Company Price and EPS Surprise

The Boeing Company Price and EPS Surprise

The Boeing Company price-eps-surprise | The Boeing Company Quote

Expectations for BGS

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

The company has started witnessing positive signs in the resumption of domestic and international air travel since the first quarter. Consequently, increased airline flight operations are expected to have boosted aftermarket commercial jet services in the third quarter of 2021. This, in turn, must have bolstered BGS unit’s revenues in the yet-to-be-reported quarter.

Lower asset impairment along with a favorable mix of services are expected to have boosted operating margin of  the BGS unit. This in turn must have favorably contributed to its bottom-line performance in the third quarter.

The Zacks Consensus Estimate for BGS unit’s revenues, pegged at $4,072 million, indicates an improvement of 10.2% from third-quarter 2020 revenues.

The consensus mark for this segment’s earnings is pegged at $501 million, which indicates a notable improvement of 84.9% from third-quarter 2020.

Cash Flow Projections

Improving air travel statistics in recent times along with increased deliveries of the 737 MAX jets are expected to have resulted in inventory burndown associated with 737 and 787 programs during the third quarter of 2021. This along with reduced expenditures on lower wide-body production rates is projected to have boosted Boeing’s operating cash flow in the soon-to-be-reported quarter.

Q3 Expectations

The Zacks Consensus Estimate for total revenues is pegged at $17.12 billion, suggesting 21.1% improvement from the prior-year reported number. The consensus estimate for the bottom line is pegged at 18 cents per share, indicating an improvement of 113% from the year-ago quarter’s tally.

What the Zacks Model Unveils

Our proven model predicts 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. This is not the case here, as stated below:



Boeing has an Earnings ESP of +100.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

A Recent Defense Release

Hexcel Corporation HXL reported third-quarter 2021 adjusted earnings of 13 cents per share, which exceeded the Zacks Consensus Estimate of 8 cents by 62.5%.

Stocks to Consider

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



Transdigm Group TDG has an Earnings ESP of +0.36% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.



CAE Inc CAE has an Earnings ESP of +9.46% and a Zacks Rank #3.



 



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The Boeing Company (BA): Free Stock Analysis Report

 

Transdigm Group Incorporated (TDG): Free Stock Analysis Report

 

Hexcel Corporation (HXL): Free Stock Analysis Report

 

CAE Inc (CAE): Free Stock Analysis Report

 

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