Will Boeing Deliver "Bullish"
Earnings Next Week? Dear Reader,
Markets are closed today in observance of the Good Friday holiday. I hope everyone has a relaxing holiday weekend with family and friends.
Of course, trying to ignore the current situation in financial markets is a big ask.
But with a data-driven stock rating system at our disposal, we can do better than most to put the odds in our favor in this highly uncertain environment.
Looking ahead to next week’s earnings report will help us prepare for potentially market-moving reports. UnitedHealth (UNH) set off fireworks this week … who will be next?
We’ll have a look today.
But first, let’s kick this off with a stock I highlighted last Friday… Earnings Recap: UAL’s Highly Unusual Guidance United Airlines (UAL) beat expectations, reporting $0.91 adjusted earnings per share versus $0.76 expected for the first quarter. As I mentioned last week when UAL landed on my “bearish” earnings screen, that’s still well below its $2.94 mark from the previous quarter.
The report didn’t exactly exude confidence. While company executives still expect a profitable year, they provided two forecasts – one for “normal” conditions and an alternate one, in case the U.S. economy slips into recession. They also mentioned weakening domestic demand, but that booking was still steady for now.
All told, airlines and the broader transportation services sector will be ones to watch as we barrel toward the summer travel season.
Now let’s look ahead to next week’s earnings reports… Boeing’s Negative Earnings Take Flight Remember, while my Green Zone Power Rating system is not specifically designed to forecast a company’s results in a single quarter nor predict investors’ reactions to them…
It does give us a 360-degree snapshot of the company’s strength and how the stock has been behaving recently. It’s a robust system that gives longer-term buy-and-hold investors a good gauge of the stock’s potential to beat the market over the following months and even years.
Combine that with an understanding of Wall Street’s expectations for a company’s upcoming earnings report … and you have what’s needed to assess whether a “strong” company is poised to encourage (or disappoint) investors, and vice versa.
Let’s dig in first with companies that are expected to beat their previous quarter’s earnings numbers and thus are poised to trade higher if they succeed at meeting those expectations…
For this screen, stocks must meet four criteria: - The stock is covered by 10 or more analysts.
- The average analyst recommendation is a “Buy.”
- It BEAT analysts’ EPS estimates for the previous quarter.
- The average analyst estimate for the current quarter's EPS is greater than the previous one.
Here are five important companies set to report next week:  Right off the bat, Boeing (BA) sticks out like a sore thumb to me.
While analysts expect a meaningful improvement when Boeing reports earnings before the bell on Wednesday, EPS is still expected to be negative for the first quarter.
We’ve covered Boeing over the years at Money & Markets. The company just can’t escape the headwinds, and now is no different…
Just this morning, this headline crossed my feed:  China returned one of four new Boeing jets on Friday as the trade war continues.
While I can’t reveal Boeing’s exact rating in my Green Zone Power Rating system (that’s reserved for my paid-up Green Zone Fortunes subscribers), I can say that BA (“crash”) lands in the “high-risk” category, meaning it is poised to vastly underperform the market from here.
We could see some positive trends when Boeing reports earnings next week, but my system points to high volatility and poor returns from Boeing ahead.
Next week, Lockheed Martin (LMT) will also report, giving us some insights into the defense sector and government spending. With a new administration in the White House, this is always a sector to watch.
We’ll also get a peek at the tech sector with stocks like ServiceNow (NOW) … and Aon (AON) is definitely one to watch as well, as insurance is typically considered a “recession-proof” industry.
The companies above are expected to deliver “positive” news, so it could spell trouble if they don’t…
Now let’s look at the companies expected to report declining earnings next week… | 
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Click here to watch. | A Few Standout “Bearish” Stocks My bearish earnings screen is simpler, mainly because Wall Street’s analysts rarely give stocks “sell” ratings, even when they’re rather obviously deserved.
For this screen, we’re only looking for two things: - The stock must be covered by 10 or more analysts.
- The average analyst estimate for the current quarter's EPS is less than the previous quarter's.
We want companies that are covered by a sufficiently large group of Wall Street analysts who collectively expect the company to report a quarter-over-quarter decline in earnings.
Here’s what we’ve got for next week:  Here we have another defense company in Northrop Grumman (NOC), but unlike Street’s growth expectations for Lockheed Martin (LMT), analysts expect an earnings decline of $2.45 from NOC.
Right now, NOC earns a “strong bullish” Green Zone Power Rating, but a negative earnings outlook could lead my system to rank it lower once it ingests the company’s latest numbers.
We’ll loop back around on those two stocks, and of course, Boeing, in next week’s Friday edition of What My System Says Today…
Otherwise, have a great weekend!
To good profits, 
Adam O'Dell
Editor, What My System Says Today
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