Boeing earnings preview: Can the company meet even low expectations?

Boeing Co. is slated to report second-quarter results on the Wednesday before the bell, giving investors a clearer picture of the impact of the coronavirus pandemic on a company that is already plagued with problems of its own making.

Boeing BA,
he’s scheduled to hold a call with analysts after the results.

The company has a low bar to clear in the second quarter as “investor expectations remain low,” analysts at Goldman Sachs said in a recent note.

The quarter’s cash burn will likely be high, but Boeing will likely be able to say it is at a peak, analysts said. Production rate reviews are possible, but largely already anticipated by investors, they said.

Expect investors to be interested in any updates on the company’s 737 Max aircraft. Boeing’s 737 Max aircraft have been connected to the world since March 2019, after two fatal accidents less than five months apart that are believed to be due to a faulty anti-star system.

Solutions are still under review by the regulator, and the plane’s return to service has been repeatedly postponed. The company has established a return to service in 2020.

The Wall Street Journal recently reported, however, that the new drawbacks are likely to delay that in early 2021 at the latest, as the Federal Aviation Administration has decided to seek public comment before completing Boeing’s software and hardware changes. .

Related:Airbus will reduce the workforce in an attempt to weather its ‘most serious crisis’

That would also postpone a return to the skies abroad, as other regulators would take weeks to follow the FAA.

Here is what you can expect:

Profits: The consensus of 27 Wall Street analysts polled by FactSet calls for a GAAP loss of $ 1.86 per share for Boeing, which would compare to a GAAP loss of $ 5.21 per share in the second quarter of 2019.

Analysts expect an adjusted loss of $ 2.56 per share, which would compare to an adjusted loss of $ 5.82 per share a year ago. The second quarter of last year was the first full quarter after the 737 Max bases.

Estimize, a crowdsourcing platform that brings together estimates from Wall Street analysts, as well as buy analysts, fund managers, company executives, academics, and others, expects an adjusted loss of $ 2.47 per share.

Income: Analysts surveyed by FactSet expect sales of $ 13.16 billion for Boeing, down from $ 15.75 billion a year ago. Estimize sees revenue of $ 13.22 billion for the company.

Movement of values: So far this year, Boeing shares have lost 46%, compared to losses of around 7% for the DIA Jones Industrial Average DJIA,
and 1% for the S&P 500 SPX index,
in the same period Boeing is a component of Dow.

What else to expect: Cowen analysts earlier this month were concerned that consensus expectations for Boeing seemed too high, making the quarter “a wild card.”

The second quarter “will be a disaster,” they said, and EPS’s expected loss was “optimistic given considerably lower commercial delivery / service sales and severance payments for maximum and maximum awards,” they said.

The surge in COVID-19 cases in the US and renewed tensions with China are additional headwinds.

Several airlines, plagued by sharp declines in revenue thanks to near-stop business and leisure travel, have already announced the early retirement of some of their Boeing aircraft and have postponed or canceled their orders entirely.

Earlier this month, Boeing reported that it delivered 70 aircraft this year through June, a 71% decrease year-over-year.

See also: Boeing Q2 commercial aircraft deliveries drop 78% from last year as COVID-19 weighs

“More importantly, cancellations continue to eat away at the delay,” RBC analysts said in a note. On the upside, June may have been the peak of bad news on the sales front, analysts said.

“Although the short-term operating environment remains bleak, we view June deliveries (73% less year-over-year and 150% month-over-month) as an indication that the worst of the headwinds against production associated with the grounding Max and COVID-19 are probably behind us, ”they said.