Boeing, General Motors and Ford report Q2 earnings this week. Here’s a look at what might be expected from their quarterly reports.
Boeing (BA) and General Motors (GM) report earnings before the open Wednesday, July 25. Later that day, Ford (F) releases results after the close.
All three of these company’s stocks have faced some pressure over the past few months stemming from worries over tariffs. Not only has there been the possibility their finished products would be targeted, but many of the tariffs already implemented were on raw materials and components used in manufacturing, potentially increasing costs.
The administration said last week it plans on talks with Europe’s trade reps this week regarding auto tariffs, so maybe some news could surface there. Keep an eye out for any headlines from those talks, and consider listening to company earnings calls to get an idea of how management thinks they might impact business.
Following the Farnborough International Airshow last week, BA announced it had received $98.4 billion in orders and commitments for commercial aircraft, and another $2.1 billion from commercial and defense service orders and agreements. At the end of Q1, BA reported a backlog of $486 billion, comprised of more than 5,800 commercial aircraft.
While the backlog is important, what the company actually produced and delivered is what translates into results. Per usual, BA already released its Q2 deliveries a few weeks ago. It delivered a total of 194 airplanes in the quarter, 6% more than last year. Most of that was attributed to the 737 line, which accounted for 137 of the deliveries, 14 more than a year ago. BA also delivered 38 787 Dreamliners, five more than a year ago. Deliveries of both the 747 and 777 units declined.
For Q2, BA is expected to report adjusted EPS of $3.24, up from $2.55 in Q2 2017, on revenue of $24 billion, according to third-party consensus analyst estimates. Revenue is projected to increase 5.5% year over year.
One thing that will negatively impact this quarter’s results is a $124 million after-tax charge stemming from a Delaware Supreme Court ruling related to BA’s sale of production facilities to Spirit Aerosystems in 2005. BA said that the charge will have a $0.21 negative impact to EPS in the quarter.
Around BA’s upcoming earnings release, options traders have priced in a 3.4% stock move in either direction, according to the Market Maker Move indicator on the thinkorswim® platform. Implied volatility was at the 42nd percentile as of this morning.
In short-term trading at the July 27 weekly expiration, there hasn’t been much activity that stands out. Mostly it’s been spread out across a range of strikes around the money.
At the August 17 expiration, trading on the call side has been concentrated at the 360 strike price, while puts have been active at the 350 strike. The 380-strike call, a decent ways out of the money, also had high volume during Monday’s session, with 3,408 contracts trading hands.
Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation to sell the underlying security at a predetermined price over a set period of time.
GM already reported total Q2 deliveries were up 4.6%, which showed signs of strength across many of its lines. GM reported that U.S. sales were up 5.8%, helped out by a 21% increase in pickups. Sales in China were up 0.7%, quite a slowdown from the 8% increase reported in Q1. That drop was entirely a result of a 16% decline in Buick sales according to the report.
When GM reports Q2 results, it is expected to post adjusted EPS of $1.81 on revenue of $36.86 billion, according to third-party consensus analyst estimates. Those estimates are projecting a slight decline on both the top and bottom line for GM. In the same period last year, the company reported adjusted EPS of $1.89 on revenue of $36.98 billion.
GM’s earnings took a hit in Q1 because of a $900 million restructuring charge related to its South Korean operations. In early May, GM Korea had reached a deal with the Korean government to restructure the company and return it to profitability by 2019. Investors might be looking for some additional details on the situation there as GM looks to stabilize its Korean business.
Around the upcoming earnings release, options traders have priced in a 3.7% stock move in either direction, according to the Market Maker Move indicator. Implied volatility was at the 49th percentile as of this morning.
In short-term trading at the July 27 weekly expiration, calls have been active at the 10.5 and 11 strike prices, while puts have been active at the 10 and 10.5 strikes.
Volume has been pretty light in recent trading at the August 17 monthly expiration. On the call side, most of the trading has been at the 11 and 12 strike prices. On the put side, trading has been concentrated at the 10 and 10.5 strikes.
Earnings season kicked into high gear this week. Major reports from across sectors are scheduled this week:
The following week, these are some of the notable companies scheduled to report:
For a look at what else is going on, check out today’s Market Update if you have time.
for thinkMoney ®
Financial Communications Society 2016
for Ticker Tape
Content Marketing Awards 2016
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2018 TD Ameritrade.