Yahoo Finance Will Higher Service Revenues Aid Boeing (BA) in Q4 Earnings?
The Boeing Company BA is set to release fourth-quarter and full-year 2023 results on Jan 31, before the opening bell.
In the last reported quarter, the company incurred a loss of $3.26 per share, which came in wider than the Zacks Consensus Estimate of a loss of $3.21. A solid commercial jet services trend, backed by growing air traffic, as well as solid commercial and defense deliveries, is likely to have boosted Boeing’s fourth-quarter earnings amid impacts of abnormal costs associated with the 787 and 777X programs.
Impressive Deliveries Likely to Boost Results
Boeing’s fourth-quarter deliveries reflect a solid 3.3% improvement in commercial shipments from the year-ago quarter’s reported figure. Also, defense shipments improved 12.5% year over year.
For manufacturing companies like Boeing, successful deliveries of finished products play a crucial role in boosting revenue growth. Therefore, a notable improvement witnessed in the jet maker’s deliveries for both its commercial and defense segments can expected to have contributed favorably to its overall fourth-quarter results.
Considering the fact that Boeing’s military and commercial revenues accounted for almost 75% of the company’s total revenues as of 2022-end, an increment in delivery figures for both the commercial and defense shipments can be expected to have positively impacted the company’s overall top-line performance.
The Boeing Company Price and EPS Surprise
The Boeing Company price-eps-surprise | The Boeing Company Quote
Expectations for Boeing Global Services (“BGS”)
We remain optimistic about the BGS unit’s fourth-quarter performance.
Notably, a steadily growing domestic and international commercial air travel is expected to have bolstered fleet utilization, thereby boosting commercial jet services revenues in the fourth quarter.
This, along with several BA-converted freighter and materials management agreements in the recent past, is likely to have added an impetus to BGS’ quarterly revenues. Moreover, higher government service revenues in accordance with the company’s long-term contracts with the U.S. government and other nations must have also bolstered this segment’s top-line performance.
Double-digit operating margins projected from both the commercial and government businesses within this segment, along with solid sales expectations, must have uplifted its bottom line as well.
The Zacks Consensus Estimate for the unit’s revenues is pegged at $4,786.6 million, indicating an improvement of 4.8% from the year-ago quarter’s reported number.
The consensus mark for earnings is pinned at $841.3 million, indicating solid growth of 32.7% from the year-ago quarter’s level.
Cash Flow Projections
Strong order activity in the recent past and increased aftermarket services are expected to have favorably contributed to Boeing’s fourth-quarter cash flow reserve. However, an unfavorable effective tax rate might have had some impact on its overall cash flow.
Our model predicts cash flow of $2,409.5 million for the fourth quarter of 2023.
Q4 Expectations
Higher contract revenues, along with solid commercial as well as government service revenues, are likely to have bolstered BA’s overall fourth-quarter performance. However, abnormal costs in relation to the 787 and 777X programs, and higher periodic expenses, including research and development spending, might have had some adverse impact on the company’s bottom line.
The Zacks Consensus Estimate for Boeing’s total revenues is pegged at $21.23 billion, implying a 6.2% improvement from the prior-year period’s reported figure. The bottom-line estimate is pinned at a loss of 72 cents per share, indicating a significant improvement from the year-ago quarter’s reported loss of $1.75.
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, which is the case here.
Boeing has an Earnings ESP of +12.32% and a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Below are two other defense stocks that also have the right combination of elements to post an earnings beat this time around.
CAE Inc. CAE is slated to release third-quarter fiscal 2024 results on Feb 14. CAE has an Earnings ESP of +7.18% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CAE delivered a four-quarter average earnings surprise of 15.97%. The consensus estimate for fiscal third-quarter earnings is pegged at 18 cents per share, while that for sales is pinned at $800.7 million.
Leidos LDOS is scheduled to release fourth-quarter results on Feb 13. LDOS has an Earnings ESP of +1.88% and a Zacks Rank #2 at present.
Leidos delivered a four-quarter average earnings surprise of 11.51%. The Zacks Consensus Estimate for LDOS’ fourth-quarter earnings is pegged at $1.73 per share, while that for sales is pinned at $3.79 billion.
A Recent Defense Release
RTX Corporation’s RTX fourth-quarter 2023 adjusted earnings per share (EPS) of $1.29 beat the Zacks Consensus Estimate of $1.25 by 3.2%. The bottom line also improved 1.6% from the year-ago quarter’s level of $1.27.
RTX’s fourth-quarter adjusted sales totaled $19,824 million. The company reported GAAP sales of $19,927 million compared with $18,093 million in the fourth quarter of 2022.
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The Boeing Company (BA) : Free Stock Analysis Report
CAE Inc (CAE) : Free Stock Analysis Report
Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report
RTX Corporation (RTX) : Free Stock Analysis Report
