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The fight against the Islamic State is boosting Lockheed Martin ( LMT ) and other defense contractors ahead of earnings, but Boeing ( BA ) will take a charge on its commercial side as cargo growth slows. Boeing earnings are seen falling 7.8% to $2.13 per share, when it announces fourth-quarter results Wednesday, according to analysts polled by Thomson Reuters. Revenue is seen dipping 3.6% to $23.6 billion. Late Thursday, Boeing said it would take a $569 million charge in Q4 on its 747 program and cut its output rate to half a plane a month, down from a earlier outlook of one per month, as demand slows. Boeing currently makes 1.3 a month. The 747 is mostly used to transport cargo. “The air cargo market recovery that began in late 2013 has stalled in recent months and slowed demand for the 747-8 freighter,” Ray Conner, CEO of Boeing Commercial Airplanes, said in a statement. Boeing could also take a charge on the 787 program in Q4, as it has deferred over $28 billion in production costs for the wide-body, twin-engine jet. Boeing shares closed up 1% on the stock market today . Earlier Moody’s said increased airline traffic and the need to replace older aircraft should boost commercial growth. On the defense side, Boeing should give an update on the development of its KC-46 aerial refueling tanker. Boeing took a $536 million after-tax charge in Q2 over the plane for the Air Force, due to higher estimated engineering and manufacturing costs. More bombs could be needed from Boeing as the Air Force has dropped over 20,000 missiles and bombs in its fight against ISIS, depleting stockpiles below what some see as optimal. The U.S. is also approving munitions sales to Middle East allies. In November, the State Department approved the sale of 13,000 Boeing and Raytheon ( RTN ) bombs to Saudi Arabia for $1.29 billion. Qatar and Saudi Arabia also got approval to buy more Patriot air-defense systems and Patriot missiles from Raytheon and Lockheed. The Boeing-Lockheed team is formally protesting the long-range strike bomber win by Northrop Grumman ( NOC ). The Government Accountability Office is expected to rule on the protest by Feb. 16. Lockheed is slated to report Q4 results Tuesday. Earnings are expected to fall 2.3% to $2.94 per share, and revenue to dip 1.4% to $12.4 billion. The over-budget and behind-schedule F-35 fighter jet has been a controversial topic, but the federal government’s fiscal 2016 budget includes money for 11 extra F-35s. Lockheed’s Q4 report will include two months of results from Sikorsky, which it purchased from United Technologies ( UTX ) for $9 billion in November. Earlier this week, Lockheed said in a filing to the Securities and Exchange Commission that if Sikorsky had been its own company, it would have reported a net profit of $52 million during the first nine months of the year, but revenue would have fallen 19%. Lockheed stock advanced 0.6% Friday. Raytheon is due to report earnings on Thursday. Wall Street expects a 3% EPS drop to $1.81 after an 11% decline in Q3. Raytheon shares rose 0.7%. Follow Gillian Rich on Twitter @IBD_GRich . Scalper1 News
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