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Why Is Spirit Aerosystems (SPR) Down 1.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for Spirit Aerosystems (SPR). Shares have lost about 1.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Spirit Aerosystems 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 drivers.

Spirit AeroSystems Q2 Earnings Beat, Revenues Lag

Spirit AeroSystemsreported second-quarter 2018 adjusted earnings of $1.63 per share, which surpassed the Zacks Consensus Estimate of $1.51 by 7.9%. The bottom line also came higher than the year-ago quarter's figure of $1.57 by 4%.

Barring one-time adjustments, the company reported GAAP earnings of $1.31 per share against the loss of 48 cents incurred in the year-ago quarter.

Highlights of the Release

Total sales of $1,837 million in the second quarter missed the Zacks Consensus Estimate of $1,855 million by 1%. However, the top line rose 1% on a year-over-year basis.

Backlog at the end of second-quarter 2018 was $47 billion, flat with the prior-quarter's figure.

Segment Performance

Fuselage Systems: Revenues at the segment grew 9.8% to $1,029.7 million from $938.2 million in second quarter 2017. Higher production deliveries of the Boeing 737 jets as well as increased defense work drove the top line.

Propulsion Systems: The segment recorded revenues of $422.7 million in the quarter, down 3.2% from $436.5 million a year ago. The decrease can be attributed to lower production deliveries on the Boeing 777 program as well as lower revenues realized from the Boeing 787 program due to adoption of ASC 606.

Wing Systems: Revenues at the segment decreased 15% to $383 million from $450.5 million in the prior-year quarter. The downside was due to lower revenue realized from the Boeing 787 program, Airbus A350 XWB and the impact of foreign currency fluctuations on the Airbus A320 program.

Financial Position

As of Jun 28, 2018, Spirit AeroSystems had $593 million in cash and cash equivalents compared with $423.3 as of Dec 31, 2017.

As of Jun 30, 2018, long-term debt (excluding current portion) totaled $1,858 million compared with $1,120 million at the end of 2017.

Cash flow from operating activities increased to $397.2 million at the end of second-quarter 2018 from $334 million at the end of second-quarter 2017.

Capital expenditures summed $61 million in the reported quarter compared with $47 million in the year-ago quarter.

Guidance

Spirit AeroSystems reiterated financial guidance for 2018. The company continues to expect earnings per share in the range of $6.25-$6.50 on revenues of $7.1-$7.2 billion.

Additionally, management continues to expect free cash flow in the $550-$600 million band for the current year.

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 -5.82% due to these changes.

VGM Scores

At this time, Spirit Aerosystems has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Based on our scores, the stock is equally suitable for value and momentum investors while growth investors may want to look elsewhere.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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