Boeing (NYSE:BA)'s commercial airplane business for the third quarter of 2023 likely saw an uptick due to the delivery of 19 787 Dreamliner jets and ongoing cost management efforts, despite facing challenges from abnormal costs and increased R&D expenses. The earnings, set to be released on Tuesday, are anticipated to reflect these difficulties, particularly those tied to the halted 777X program.
The company experienced an overall decline in commercial delivery due to a 20.5% decrease in the 737 delivery. Yet, the higher price of widebody jets such as the 777 and 787 likely boosted the Commercial Airplane (BCA) segment’s overall revenues. The top-line estimate for this segment is $7,255 million, marking a 15.8% improvement from last year's figure. According to InvestingPro data, the company's revenue growth for Q2 2023 was 21.18%, indicating an acceleration in the company's revenue growth.
Challenges arose from abnormal costs related to the low production rate of the 787 Dreamliner, which may have adversely affected earnings. Additionally, escalated R&D expenditures on the 777X program might have impacted earnings negatively. Despite these obstacles, increased deliveries of the 787 and ongoing cost management efforts are expected to contribute to the BCA unit’s third-quarter bottom-line growth.
The company has also been ramping up production rates for some key commercial programs due to robust demand, potentially enhancing its production efficiency. The third-quarter earnings estimate for Boeing’s commercial business segment is a loss of $524 million, an improvement from last year's reported loss of $643 million.
InvestingPro Tips suggest that Boeing's RSI indicates the stock is in oversold territory, which may be an opportunity for investors. Yet, it is also important to note that 14 analysts have revised their earnings downwards for the upcoming period and the company is currently trading at a high EBITDA valuation multiple.
Boeing's chances of outperforming earnings expectations are not conclusively predicted; it currently holds an Earnings ESP of 0.00% and a Zacks Rank #3. Meanwhile, defense stocks General Dynamics (NYSE:GD), L3Harris Technologies (NYSE:LHX), and Northrop Grumman (NYSE:NOC) are set to release their third-quarter results next week and are poised to potentially beat earnings expectations.
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