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Poor Commercial Deliveries to Hurt Boeing (BA) Q1 Earnings
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Significantly lower delivery figures for The Boeing Company’s (BA - Free Report) 737 product line is expected to have weighed on the company’s commercial business line in the first quarter. The novel coronavirus outbreak is also likely to hurt the unit’s results.
Scheduled for release on Apr 29, Boeing’s first-quarter 2020 results are likely to reflect these factors.
Click here to know how the company’s overall Q1 performance is expected to have been.
737 Max Remains a Growth Inhibitor
Once considered a key growth catalyst for Boeing’s revenues, the 737 Max has been weighing heavily on the company’s overall performance since last March. At the onset of the first-quarter 2020, the company halted production of this jet model altogether. Consequently, Boeing’s commercial business is expected to have performed dismally.
Due to this jet model’s infamous face loss in recent times, majority of the airlines either cancelled scheduled delivery of 737 Max or delayed the same. This, in turn, is expected to have weighed on revenues from Boeing’s commercial unit.
We expect Boeing’s soon-to-be-reported results to duly reflect these developments.
COVID & 737 Grounding Lower Commercial Deliveries
Boeing’s first-quarter deliveries reflected a 66.4% year-over-year plunge incommercial shipments. In particular, the aircraft giant could deliver only 50 airplanes, significantly down year over year, primarily due to poor 737 jet deliveries and comparatively lower deliveries of the 787 Dreamliner. This dragged down overall commercial delivery figures.
Along with such lower delivery volumes, production cuts adopted by the jet maker for the 737 product line last April might have weighed on the performance of Boeing’s commercial business.
While lower 737 production was the result of this program’s technical issues, overall commercial deliveries of the aerospace giant were affected by the coronavirus pandemic. Notably, the novel coronavirus outbreak forced majority of nations across the globe to impose strict travel ban on their citizens since the middle of the first quarter. As air traffic slowed sharply, new aircraft, which were supposed to get delivered, are now lying idle at Boeing's manufacturing plants.
The Zacks Consensus Estimate for the company’s commercial revenues is pegged at $6.37 billion, suggesting 46.1% decline from the prior-year reported number.
Rise in Costs to Impact Earnings
At the end of 2019, the 737 program had a backlog of approximately 4,400 aircraft. Since the majority of airlines have delayed their deliveries of the 737 product line, Boeing is incurring cost of storage of the completed aircraft. These additional costs, along with delays in the supply chain, delays in return to service as well as reductions in the production rate are likely to have pushed up commercial segment’s overall expenses, thereby impacting its bottom line.
The consensus estimate for Boeing’s commercial unit stands at a loss of $1.84 billion. In the year-ago period, it had generated revenues of $1.17 billion.
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 -10.34% and a Zacks Rank #4 (Sell), which makes surprise prediction difficult. 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 in their upcoming release:
Huntington Ingalls Industries, Inc. (HII - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #3. The company will announce first-quarter 2020 earnings results on May 7.
Northrop Grumman Corp. (NOC - Free Report) has an Earnings ESP of +1.66% and a Zacks Rank #3. The company is set to announce first-quarter 2020 earnings on Apr 29.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Shutterstock
Poor Commercial Deliveries to Hurt Boeing (BA) Q1 Earnings
Significantly lower delivery figures for The Boeing Company’s (BA - Free Report) 737 product line is expected to have weighed on the company’s commercial business line in the first quarter. The novel coronavirus outbreak is also likely to hurt the unit’s results.
Scheduled for release on Apr 29, Boeing’s first-quarter 2020 results are likely to reflect these factors.
Click here to know how the company’s overall Q1 performance is expected to have been.
737 Max Remains a Growth Inhibitor
Once considered a key growth catalyst for Boeing’s revenues, the 737 Max has been weighing heavily on the company’s overall performance since last March. At the onset of the first-quarter 2020, the company halted production of this jet model altogether. Consequently, Boeing’s commercial business is expected to have performed dismally.
The Boeing Company Price and EPS Surprise
The Boeing Company price-eps-surprise | The Boeing Company Quote
Due to this jet model’s infamous face loss in recent times, majority of the airlines either cancelled scheduled delivery of 737 Max or delayed the same. This, in turn, is expected to have weighed on revenues from Boeing’s commercial unit.
We expect Boeing’s soon-to-be-reported results to duly reflect these developments.
COVID & 737 Grounding Lower Commercial Deliveries
Boeing’s first-quarter deliveries reflected a 66.4% year-over-year plunge incommercial shipments. In particular, the aircraft giant could deliver only 50 airplanes, significantly down year over year, primarily due to poor 737 jet deliveries and comparatively lower deliveries of the 787 Dreamliner. This dragged down overall commercial delivery figures.
Along with such lower delivery volumes, production cuts adopted by the jet maker for the 737 product line last April might have weighed on the performance of Boeing’s commercial business.
While lower 737 production was the result of this program’s technical issues, overall commercial deliveries of the aerospace giant were affected by the coronavirus pandemic. Notably, the novel coronavirus outbreak forced majority of nations across the globe to impose strict travel ban on their citizens since the middle of the first quarter. As air traffic slowed sharply, new aircraft, which were supposed to get delivered, are now lying idle at Boeing's manufacturing plants.
The Zacks Consensus Estimate for the company’s commercial revenues is pegged at $6.37 billion, suggesting 46.1% decline from the prior-year reported number.
Rise in Costs to Impact Earnings
At the end of 2019, the 737 program had a backlog of approximately 4,400 aircraft. Since the majority of airlines have delayed their deliveries of the 737 product line, Boeing is incurring cost of storage of the completed aircraft. These additional costs, along with delays in the supply chain, delays in return to service as well as reductions in the production rate are likely to have pushed up commercial segment’s overall expenses, thereby impacting its bottom line.
The consensus estimate for Boeing’s commercial unit stands at a loss of $1.84 billion. In the year-ago period, it had generated revenues of $1.17 billion.
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 -10.34% and a Zacks Rank #4 (Sell), which makes surprise prediction difficult. 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 in their upcoming release:
Curtiss-Wright Corp. (CW - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank #3. The company is scheduled to announce first-quarter 2020 earnings on May 6. You can see the complete list of today’s Zacks #1 Rank stocks here.
Huntington Ingalls Industries, Inc. (HII - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #3. The company will announce first-quarter 2020 earnings results on May 7.
Northrop Grumman Corp. (NOC - Free Report) has an Earnings ESP of +1.66% and a Zacks Rank #3. The company is set to announce first-quarter 2020 earnings on Apr 29.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>