How Commodities Impact Earnings

Updated from June 25.

Editor's note: Today, Tyson Foods (TSN Quote) and Kraft Foods (KFT Quote) announced their latest quarterly earnings, with the rise in commodity prices a key factor in both companies' results. While Tyson's profit dropped, Kraft's profit rose.

In "How to Invest in Food Stocks: The 'Middleman' Plays" and "How to Invest in Food Stocks: Restaurants," RealMoney contributor Scott Rothbort put Kraft and Tyson in the context of the "food investment chain."

TheStreet.com TV: Rising Food Costs, Fat Returns

David Peltier dissects the strong earnings report from Kraft Foods and offers his forecast as food prices rise.

To watch the video, click the player below:

In the following article, Rothbort covers five companies that have also recently reported earnings and how they have been impacted by the rise in commodity prices.

As we all know, commodity costs have been on the rise. With the second earnings season of 2008 ("Get in Shape for Earnings Season") in full swing, let's take a look at how American companies have been affected by the commodity boom.

Boeing

Boeing (BA Quote) runs two different divisions: Boeing Commercial Airplanes (BCA) and Integrated Defense Systems (IDS). BCA has developed the new more energy-efficient passenger airplane, 787 Dreamliner. Orders for the Dreamliner have helped Boeing's backlog of new orders surge to record highs.

Unfortunately, Boeing has failed to delivery its new product, and continued delays and project mismanagement have led to increased costs. So when will the company reap profits from the fuel-efficient Dreamliner? It might not be until Boeing actually tests Dreamliner in-flight in the fourth quarter of this year or until it delivers its first plane in the third quarter of next year.

In the meantime, Boeing is being hurt by rising fuel costs, as U.S. domestic carriers are faltering. Many airlines are not placing new orders, filing for bankruptcy or cutting routes. As a result, it is possible that Boeing will have a significant inventory of unused (unsold) aircraft on the market.

Schlumberger

Schlumberger (SLB Quote) is one of the premier oil and gas equipment and services companies in the world. As energy prices have soared, the need to drill for more sources of oil and gas have increased. Schlumberger reported second-quarter 2008 earnings per share (EPS) of $1.16 on revenue of $6.76 billion. Income from operations rose 9% sequentially and 13% year-over-year to $1.42 billion. To put these numbers into perspective, the company was expected to earn $1.12 per share on revenue of $6.48 billion. In the same quarter last year, Schlumberger earned $1.02 on revenue of $5.64 billion.