Boeing’s Commercial Airplane Business Shows Growth Despite Challenges
Boeing’s Third Quarter Performance
Boeing (NYSE:) is expected to report positive growth for its commercial airplane business in the third quarter of 2023. Despite facing challenges such as abnormal costs and increased R&D expenses, the company’s delivery of 19 787 Dreamliner jets and ongoing cost management efforts have contributed to this uptick. The earnings report, set to be released on Tuesday, will likely reflect these difficulties, particularly those related to the halted 777X program.
Factors Affecting Commercial Delivery
Although Boeing experienced an overall decline in commercial delivery due to a 20.5% decrease in 737 delivery, the higher price of widebody jets like the 777 and 787 has boosted the Commercial Airplane (BCA) segment’s revenues. The top-line estimate for this segment is $7,255 million, marking a 15.8% improvement from the previous year. This indicates an acceleration in the company’s revenue growth, as Q2 2023 saw a 21.18% increase in revenue.
Challenges and Growth Potential
The low production rate of the 787 Dreamliner has led to abnormal costs, which may have affected earnings. Additionally, increased R&D expenditures on the 777X program could have had a negative impact. However, despite these obstacles, the increased deliveries of the 787 and ongoing cost management efforts are expected to contribute to the BCA unit’s bottom-line growth in the third quarter.
The company has also ramped up production rates for key commercial programs to meet robust demand, enhancing its production efficiency. The third-quarter earnings estimate for Boeing’s commercial business segment is a loss of $524 million, an improvement from the previous year’s reported loss of $643 million.
InvestingPro Tips and Outlook
InvestingPro Tips suggest that Boeing’s stock is currently in oversold territory, presenting a potential opportunity for investors. However, it’s important to note that 14 analysts have revised their earnings downwards for the upcoming period, and the company is trading at a high EBITDA valuation multiple.
Boeing’s chances of outperforming earnings expectations are not conclusively predicted, as it currently holds an Earnings ESP of 0.00% and a Zacks Rank #3. Meanwhile, defense stocks such as General Dynamics (NYSE:), L3Harris Technologies (NYSE:), and Northrop Grumman (NYSE:) are set to release their third-quarter results next week and are poised to potentially beat earnings expectations.
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