News

The Boeing Company’s BA Defense, Space & Security segment is likely to have recorded impressive fourth-quarter 2023 revenues, owing to solid sales from space programs as well as higher deliveries of its defense products.

However, higher estimated costs from the VC-25B program are likely to have had an adverse impact on the BDS segment’s bottom line.
Boeing’s fourth-quarter and full-year 2023 results are scheduled to be released on Jan 31.

Click here to know how the company’s overall performance might have been in the soon-to-be-reported quarter.

Steady Order Flow to Aid Backlog

With the U.S. administration spending significantly on the nation’s defense capabilities for the past few years, Boeing Defense, Space & Security (BDS) unit has been witnessing solid order flow from the Pentagon, NASA and Congress for its varied products. Moreover, the diverse regional threats witnessed across Asia, Europe and the Middle East have also been offering growth opportunities for this unit’s products.

The Boeing Company Price and EPS Surprise

Consequently, Boeing has been witnessing a solid global demand for its major combat programs, which translated into an overall order value of $6 billion for the BDS unit in the third quarter. Such solid order values thereby bolster the BDS segment’s backlog.

We expect the upcoming results to reflect a similar order count for the unit, thereby once again bolstering its backlog figure.

Will Improved Deliveries Aid Q4 Performance?

Boeing’s fourth-quarter defense delivery figures indicate an improvement of 12.5% from the year-ago period’s level.

Its defense deliveries totaled 54 in the quarter, up from 48 in the prior-year quarter. Such improved delivery figures are expected to have bolstered the defense segment’s revenues in the soon-to-be-reported quarter. Moreover, increased sales from space and proprietary programs are also projected to have boosted the BDS unit’s top-line performance.

The Zacks Consensus Estimate for the defense unit’s revenues is pegged at $6,267.7 million, indicating an improvement of 1.4% year over year.

Earnings Prospect

Strong order activities in the previous quarters as well as lower charges from development programs, as BA progresses in these programs, are expected to have favorably contributed to BDS’ earnings performance.

However, higher estimated costs from the VC-25B program are likely to have had an adverse impact on the BDS segment’s bottom line. Moreover, the impact of supply-chain constraints might have hurt its overall fourth-quarter earnings.

Notably, the bottom-line estimate for the company’s defense unit is pegged at a loss of $233.2 million, indicating a deterioration from the year-ago quarter’s reported earnings of $112 million.

What the Zacks Model Unveils

According to the Zacks model, the combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) — increases the odds of an earnings beat. That 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.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.