June 21, 2022

Increase in 737 deliveries to boost Boeing (BA) first quarter earnings – April 25, 2022

The increase in 737 delivery figures should have boosted The Boeing Companyit is (BA Free report) business activity in the first quarter. However, the results for the first quarter of 2022, which are due to be published on April 27, should reflect mixed impacts on results.

Click here to find out how the company’s overall performance in the first quarter should have been.

Strong 737 Max deliveries to drive growth

Thanks to the steady recovery in air traffic, an improvement in delivery figures for Boeing’s 737 jets, a trend we have witnessed over the past two quarters, has been observed in the first quarter of 2022. Notably, the airline giant Aerospace delivered 86,737 jets in the upcoming quarter, reflecting a pretty solid 36.5% improvement over the 63 units delivered in the year-ago quarter.

In fact, such strong delivery numbers of 737s primarily resulted in a significant 23.4% increase in the company’s overall commercial deliveries. This, in turn, must have contributed to revenue in the Boeing Commercial Airplane (BCA) business segment in the soon-to-be-released quarter.

However, the aerospace giant did not deliver any of its 787 Dreamliner jets in the first quarter of 2022, due to production quality issues related to the program. This may have had a partial impact on the revenue performance of the BCA segment.

Currently, the Zacks consensus estimate for Boeing’s Commercial Operations segment revenue, set at $6,032 million, indicates a solid improvement of 41.3% over the reported figure for the prior year quarter.

Earnings expectation

On the cost side, the financial impact of inspections, rework, temporary production rate adjustments and delivery delays regarding the 787 performance issue likely impacted BCA’s operating profit, hurting as well as its quarterly results. In addition, abnormal costs related to this program could have weighed on the net result of this unit.

However, improved commercial aircraft financial performance due to increased 737 MAX deliveries and the BCA team’s ongoing efforts to manage costs through business transformation activities must have contributed to the earnings growth. of this unit in the first quarter.

Additionally, we expect continued improvement in corporate spending on 737 storage as aircraft that have been sitting in inventory for so long are gradually being delivered.

Thus, the effect of the aforementioned factors on the overall earnings performance of the BCA segment in the first quarter appears to have been mixed.

Currently, the Zacks consensus estimate for Boeing’s Commercial Operations segment net income, pegged at a loss of $279 million, indicates an improvement from the reported loss figure of $856 million a year ago. year.

What the Zacks model reveals

Our proven model does not conclusively predict an earnings beatdown for Boeing this time around. The combination of a positive Earnings ESP and a Zacks rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of beating Earnings. That’s not the case here.

Boeing has an earnings ESP of +1.72% and a Zacks #4 (sell) ranking. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

Actions to Consider

Here are a few defense companies you might want to consider as they have the right combination of elements to post a pace of earnings this season:

Northrop Grumman (NOC Free Report) has a +1.32% Earnings ESP and Zacks Rank #3. You can see the full list of today’s Zacks #1 Rank stocks here.

Northrop Grumman has a four-quarter average earnings surprise of 11.05%. NOC’s long-term earnings growth rate is 6.2%. Zacks’ consensus estimate for Northrop’s first-quarter sales and earnings is set at $8.88 billion and $5.95 per share, respectively.

Spirit Aerosystems (PSR Free Report) has an ESP on Earnings of +9.34% and a Zacks Rank #3. It has a four-quarter average negative earnings surprise of 14.56%.

SPR’s long-term earnings growth rate is 8.5%. Zacks’ consensus estimate for Spirit Aerosystems’ first quarter sales is set at $1.09 billion. The consensus estimate of net income is set at 61 cents per share, respectively.

CAE (CAE Free Report) has a +11.11% Earnings ESP and Zacks Rank #3. CAE posted a surprise four-quarter average profit of 0.72%.

CAE’s long-term earnings growth rate is set at 8%. Zacks’ consensus estimate for CAE’s first-quarter sales and earnings are pegged at $744.5 million and 18 cents per share, respectively.

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