Aerospace and defense behemoth
The Boeing Co.
) is set to release its third quarter 2013 results before the
market opens on Wednesday, Oct 23.
Last quarter, Boeing posted a 5.70% positive surprise on the back
of a solid performance across the board. Let's see how things are
shaping up for the third quarter.
Factors to Consider this Quarter
Despite the many technical glitches plaguing the much-hyped
Dreamliner, the company remains well on track with its robust
backlog and deliveries. Recently, Boeing announced that its
commercial delivery during the third quarter accelerated 14.1%
from the year-ago period as the pace of deliveries for its 787
Dreamliner nearly doubled.
Meanwhile, Boeing's deliveries in the defense and space business
numbered 43 in the third quarter of 2013 compared with 50 in the
third quarter of 2012 and 31 in the second quarter 2013.
Headwinds in the global airline industry and cutbacks in the U.S.
defense budget have certainly shaken the confidence of many
investors. Budget deficits and political uncertainty make future
defense budgets vulnerable to cutbacks. The threat of
sequestration has created significant planning difficulties for
the customers and the entire aerospace industry, thereby leading
to a decline in orders.
However, looking at its accounts, Boeing's strong balance sheet
and cash flows provide financial flexibility in matters of
incremental dividend, ongoing share repurchases and earnings
accretive acquisitions. Its diversified revenue stream provides a
steady earnings stream leading to strong cash flows.
Our proven model does not conclusively show that Boeing will beat
earnings this quarter. That is because a stock needs to have both
(Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for
this to happen. Unfortunately this is not the case here as
Negative Zacks ESP:
This is because the Most Accurate estimate stands at $1.53, while
the Zacks Consensus is higher at $1.54. This results in a
difference of -0.65%.
Boeing's Zacks Rank #3 (Hold) however complicates the predictive
power of ESP. We also need to have a positive ESP to be confident
of an earnings surprise call. We caution against stocks with
Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings
announcement, especially when the company is seeing negative
Other Stocks to Consider
However, we see likely earnings beats coming from these 3
companies from the same industry:
Lockheed Martin Corp.
), with Earnings ESP of +2.21% and a Zacks Rank #1 (Strong Buy).
Northrop Grumman Corp.
), with Earnings ESP of +2.21% and a Zacks Rank #2 (Buy).
General Dynamics Corp.
), with Earnings ESP of +1.80% and a Zacks Rank #3 (Hold).
BOEING CO (BA): Free Stock Analysis Report
GENL DYNAMICS (GD): Free Stock Analysis
LOCKHEED MARTIN (LMT): Free Stock Analysis
NORTHROP GRUMMN (NOC): Free Stock Analysis
To read this article on Zacks.com click here.