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Spirit Aerosystems (SPR) Up 1.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Spirit Aerosystems (SPR). Shares have added about 1.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Spirit Aerosystems due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Spirit AeroSystems Q1 Loss Widens, Revenues Rise Y/Y   

Spirit AeroSystems Holdings reported a first-quarter 2024 adjusted loss of $3.93 per share, which came in much wider than the Zacks Consensus Estimate of a loss of 44 cents per share. The loss also widened from the year-ago quarter’s reported loss of $1.69 per share.

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Barring one-time adjustments, Spirit AeroSystems recorded a GAAP loss of $5.31 per share compared with a loss of $2.68 in the prior-year period.

Highlights of the Release

Total revenues of $1.70 billion lagged the Zacks Consensus Estimate of $1.73 billion by 1.7%. However, the top line rose 19% on a year-over-year basis, driven by higher production activities of the company’s commercial programs as well as higher Defense and Space revenues.

Spirit AeroSystems’ backlog at the end of the first quarter totaled $49 billion, up from the prior quarter’s $37 billion.

Segmental Performance

Commercial Segment: Revenues in the segment increased 18.1% year over year to $1.36 billion. The upside was driven by higher production across most of its programs.

The segment’s operating loss was $484.9 million compared with the operating loss of $45.5 million in the year-ago period. The deterioration can be attributed to higher changes in estimates as well as the results of the changes implemented in the product verification process in March 2024.

Defense & Space: The segment recorded revenues of $250.8 million, up 33.1% year over year, driven by increased activity of development and classified programs as well as the Sikorsky CH-53K and FLRAA programs.

The unit’s operating income increased 67.7% to $32.2 million from $19.2 million in the prior-year quarter, driven by higher activities of classified programs.

Aftermarket: This segment’s top line improved 1.5% year over year to $95.9 million, driven by higher spare part sales.

The segment’s operating profit decreased 10.4% year over year to $17.2 million owing to lower maintenance, repair and overhaul activity.

Operational Highlights

Total operating costs and expenses rose 46.1% year over year to $2.23 billion due to the higher cost of sales as well as selling, general and administrative expenses.

SPR’s operating loss in the first quarter of 2024 totaled $527.6 million compared with the operating loss of $95.1 million in the prior-year quarter. This deterioration was mainly due to unfavorable changes in estimates.

Financial Position

As of Mar 28, 2024, Spirit AeroSystems had $352 million in cash and cash equivalents compared with $823.5 million as of Dec 31, 2023.

The long-term debt as of Mar 28, 2024 totaled $3.99 billion compared with $4.02 billion as of Dec 31, 2023.

Cash outflow from operating activities amounted to $415.6 million during the first quarter of 2024 compared with cash outflow of $46.2 million recorded a year ago.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -119.42% due to these changes.

VGM Scores

Currently, Spirit Aerosystems has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Spirit Aerosystems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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Spirit Aerosystems Holdings, Inc. (SPR) : Free Stock Analysis Report

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