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Why Is Spirit Aerosystems (SPR) Up 8.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Spirit Aerosystems (SPR). Shares have added about 8.7% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

Spirit AeroSystems Q3 Loss Narrows, Revenues Rise Y/Y

Spirit AeroSystems Holdingsreported a third-quarter 2023 adjusted loss of $1.42 per share, narrower than the Zacks Consensus Estimate of a loss of $1.56 per share. However, the loss widened from the year-ago quarter’s reported loss of $1.21 cents per share.

Barring one-time adjustments, Spirit AeroSystems recorded a GAAP loss of $1.94 per share compared with a loss of $1.22 in the prior-year period.

Highlights of the Release

Total revenues of $1,439 million missed the Zacks Consensus Estimate of $1,481 million by 0.2%. However, the top line rose 13% on a year-over-year basis, driven by higher production deliveries on most Commercial programs and higher Defense and Space and Aftermarket revenues.

The company’s backlog at the end of the third quarter totaled $42.2 billion, up from the prior quarter’s level of $40.5 billion.

Segmental Performance

Commercial Segment: Revenues in the segment increased 9.8% year over year to $1,136.4 million. The upside was due to higher production across most programs. The operating loss widened to $82.1 million from the operating profit of $45 million in the year-ago period.

Defense & Space:The segment recorded revenues of $205.7 million, up 27.2% year over year, driven by increased activity on development programs and higher production on the KC-46 Tanker program.

The operating income decreased 46.7% to $9.8 million from $18.4 million in the prior-year quarter.

Aftermarket:The top line improved 21% year over year to $96.8 million, driven by higher spare part sales.

The operating profit decreased 8.2% year over year to $17.9 million.

Operational Highlights

Total operating costs and expenses rose 23.6% year over year to $1,572.6 million due to the higher cost of sales and restructuring costs.

SPR’s operating loss totaled $133.7 million compared to the operating profit of $4.5 million in the prior-year period. This increase was mainly due to higher changes in estimates and excess capacity costs recognized in the third quarter of 2023.

Financial Position

As of Sep 28, 2023, Spirit AeroSystems had $374.1 million in cash and cash equivalents compared with $658.6 million as of Dec 31, 2022.

The long-term debt as of Sep 28, 2023 totaled $3,811 million compared with $3,814.9 million as of Dec 31, 2022.

Cash outflow from operating activities amounted to $339.5 million during the first nine months of 2023 compared with $367.4 million a year ago.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed an upward trend in estimates review.

The consensus estimate has shifted 72.4% due to these changes.

VGM Scores

Currently, Spirit Aerosystems has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Spirit Aerosystems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Spirit Aerosystems belongs to the Zacks Aerospace - Defense Equipment industry. Another stock from the same industry, Teledyne Technologies (TDY), has gained 8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

Teledyne reported revenues of $1.4 billion in the last reported quarter, representing a year-over-year change of +2.9%. EPS of $5.05 for the same period compares with $4.54 a year ago.

For the current quarter, Teledyne is expected to post earnings of $5.06 per share, indicating a change of +2.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.

Teledyne has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Teledyne Technologies Incorporated (TDY) : Free Stock Analysis Report

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