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Why Is Spirit Aerosystems (SPR) Down 14% Since its Last Earnings Report?

Zacks Equity Research
Updated

A month has gone by since the last earnings report for Spirit Aerosystems Holdings, Inc. SPR. Shares have lost about 14% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to its next earnings release, or is SPR due for a breakout? 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 Q4 Earnings Top, Issues ’18 Outlook

Spirit AeroSystems recorded fourth-quarter 2017 adjusted earnings of $1.32 per share, which surpassed the Zacks Consensus Estimate of $1.22 by 8.2%.

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Excluding a one-time impact of tax-reform worth 25 cents, the company reported GAAP earnings of $1.07, which improved 20.2% from the year-ago figure of 89 cents.

For 2017, the company posted adjusted earnings of $5.35 per share, which surpassed the Zacks Consensus Estimate of $5.22 by 2.5%.

Highlights of the Release

Total revenues of $1,714 million in the fourth quarter surpassed the Zacks Consensus Estimate of $1,650 million by 3.9%. Moreover, revenues rose 9.5% year over year.

Backlog at the end of fourth-quarter 2017 was $47 billion, higher than the prior-quarter figure of $45 billion.

For 2017, the company generated revenues of $6.98 billion, which surpassed the Zacks Consensus Estimate of $6.93 billion.

Segment Performance

Fuselage Systems: Revenues at the segment grew 12.2% to $918.7 million from the prior-year figure of $819.1 million. Higher production deliveries of the Boeing 737 program as well as increased defense work and non-recurring activities on certain Boeing programs drove the results.

Propulsion Systems: The segment recorded revenues of $415.5 million in the quarter, up 2.8% from $404 million a year ago. The upside was driven by higher production deliveries on the Boeing 737 program.

Wing Systems: Revenues at the segment increased 8.6% to $377.1 million from $347.2 million in the prior-year quarter due to higher production deliveries on the Boeing 737, 787, and A320 programs.

Financial Position

As of Dec 31, 2017, Spirit AeroSystems had $423.3 million in cash and cash equivalents compared with $697.7 as of Dec 31, 2016.

As of Dec 31, 2017, long-term debt (excluding current portion) was $1,119.9 million compared with $1,060 million at the end of 2016.

Cash flow from operating activities declined to $573.7 million at the end of 2017 from $716.9 million at the end of 2016.

Capital expenditure totaled $273 million in 2017 compared with $254 million in the prior-year.

Guidance

Spirit AeroSystems issued financial guidance for 2018. The company expects to generate earnings in the range of $6.25-$6.50 on revenues of $7.1-$7.2 billion.

Management also expects free cash flow to be in the range of $550-$600 million for 2018.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.

Spirit Aerosystems Holdings, Inc. Price and Consensus

 

Spirit Aerosystems Holdings, Inc. Price and Consensus | Spirit Aerosystems Holdings, Inc. Quote

VGM Scores

At this time, SPR has a poor Growth Score of F, however its Momentum is doing a lot better with a A.  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.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

SPR has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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