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Will Lower Commercial Deliveries Hurt Boeing (BA) Q1 Earnings?

The Boeing Company BA, despite being America’s largest jet manufacturer, delivered a lower number of commercial jets in the first quarter of 2024, when compared with the prior-year quarter’s figure. This might have had some adverse impact on Boeing Commercial Airplane (BCA) unit’s top-line performance.

The company’s first-quarter results, scheduled for release on Apr 24, are likely to reflect the adverse impact of higher research and development (R&D) expenses.

Click here to know how the company might have performed in the first quarter.

Dismal Commercial Jet Deliveries: What to Expect Next?

Boeing’s first-quarter commercial jet deliveries were highlighted by a solid 40.7% decline in its 737 fleet.  This southward trend was due to increased quality checks for the 737 model that forced BA to slower its production pace for 737 jets in recent times. Notably, Boeing has come under increased scrutiny from regulators following the mid-air blowout of a door plug on a 737 MAX 9 jet in January 2024.

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

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However, the company delivered three 767 jets during the first quarter compared with one in the year-earlier period. It shipped 13 787-model compared with 11 in the corresponding period of 2023. Cumulatively, BA’s first-quarter commercial shipments went down 36.2% from the prior-year quarter’s level.

Such disappointing delivery figures for its major commercial jetliners can be expected to have partially hurt revenues for the BCA segment in the to-be-reported quarter. Nevertheless, considering the fact that the price range for BA’s 767 and 787 models is much higher than that of 737 models, the higher delivery figures for these jet models must have had favorably contributed to the BCA segment’s overall top-line performance.

Evidently, the consensus estimate for Boeing’s commercial business segment’s top line is pegged at $7,519 million, implying a solid 12.2% improvement from the year-ago quarter’s reported figure.

Earnings Expectations

As BA resumed the production of its 777X program, abnormal costs related to this jet program must have favorably contributed to the BCA segment’s bottom-line performance in the first quarter.

However, higher research and development expenditures related to investment in the 777X program, with Boeing expecting the first delivery of the 777-9 and the 777-8 freighter in 2025 and 2027, respectively, the segment’s overall earnings might have been hurt.

Moreover, as of Dec 31, 2023, Boeing had approximately 50 of its 787 aircraft in inventory that require rework. This work is expected to be completed by the end of 2024. Costs related to such rework might have also weighed down on the BCA segment’s bottom line.

The first-quarter earnings estimate for BA’s commercial business segment is pegged at a loss of $881 million, indicating a significant deterioration from the year-ago quarter’s reported loss of $615 million.

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. This is not the case here, as you will see below.

Boeing has an Earnings ESP of -15.87% and a Zacks Rank #5 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Below are three defense stocks that have the right combination of elements to post an earnings beat this time around.

Huntington Ingalls Industries Inc HII is slated to release first-quarter results on May 2. HII has an Earnings ESP of +1.39% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntington Ingalls delivered a four-quarter average earnings surprise of 20.64%. The consensus estimate for first-quarter earnings is pegged at $3.49 per share, while that for sales is pinned at $2.80 billion.

Leidos Holdings LDOS is scheduled to release first-quarter results on Apr 30. LDOS has an Earnings ESP of +1.86% and a Zacks Rank #2 at present.

Leidos delivered a four-quarter average earnings surprise of 11.85%. The Zacks Consensus Estimate for LDOS’ first-quarter earnings is pegged at $1.65 per share, while that for sales is pinned at $3.80 billion.

CurtissWright CW is slated to report first-quarter results on May 1. CW has an Earnings ESP of +0.23% and a Zacks Rank #2 at present.

CW delivered a four-quarter average earnings surprise of 7.71%. The consensus mark for CW’s first-quarter earnings is pegged at $1.75 per share, while that for sales is pinned at $665 million.

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Boeing Company (BA) : Free Stock Analysis Report

Huntington Ingalls Industries, Inc. (HII) : Free Stock Analysis Report

Curtiss-Wright Corporation (CW) : Free Stock Analysis Report

Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report

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Zacks Investment Research