Boeing's Q3 Earnings and Revenue Expected to Rise on Increased Commercial Jet Deliveries

Strategic Insights -

Air Force officials are preparing to announce the contract for a new long-range strike bomber, which could be worth up to $80 billion and is seen as a major opportunity for Boeing and its rival, Lockheed Martin. Meanwhile, the aerospace giant's commercial business is expected to see growth in the third quarter, driven by an increase in deliveries of its commercial jets. Analysts polled by Thomson Reuters forecast Boeing to report a 3.7% jump in earnings to $2.22 per share and a 3.8% rise in revenue to $24.7 billion.

Key Takeaways:

  • Boeing's commercial jet deliveries are seen increasing in Q3, with 199 deliveries expected, up from 186 in the year-ago quarter.
  • The company's 737 deliveries rose to 126, while the 777 deliveries remained flat, and its 787 Dreamliner deliveries increased to 37 from 31.
  • The Air Force plans to buy 80 to 100 new bombers, and the contract could be worth $50 billion to $80 billion, with Boeing and Lockheed Martin vying for the contract.
  • Northrop Grumman is also competing for the contract, and Moody's estimated its chances at 50% in an analyst note.
  • The KC-46 refueling tanker program has faced delays and cost overruns, including a $536 million charge in Q2, but remains on track for a production decision between January and April 2016.
  • A possible bubble in the wide-body market could be a longer-term issue for the aerospace market, as Delta Air Lines CEO Richard Anderson recently warned of a bubble in the wide-body market.
  • Analysts questioned the validity of Delta's claim, and Boeing's shares rebounded after the airline's statement.

Statistics:

  • 3.7%: The forecasted annual increase in earnings per share to $2.22.
  • 3.8%: The forecasted annual increase in revenue to $24.7 billion.
  • 199: The expected number of commercial jet deliveries in Q3.
  • 126: The number of 737 deliveries in Q3.
  • 120: The number of 737 deliveries in the year-ago quarter.
  • 37: The number of 787 Dreamliner deliveries in Q3, up from 31 in the year-ago quarter.
  • $50 billion to $80 billion: The estimated value of the bomber contract.
  • 80 to 100: The number of new bombers the Air Force plans to buy.
  • $536 million: The additional engineering and manufacturing costs related to the KC-46 tanker in Q2.

Sources:

  • "Analysts polled by Thomson Reuters"
  • "Air Force officials"
  • "Morgan Stanley"
  • "Delta Air Lines CEO Richard Anderson"
  • "Moody's"
  • "Investor's Business Daily"