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Will Spirit AeroSystems (SPR) Earnings Streak End in Q3?

Spirit AeroSystems Holdings, Inc.SPR is set to release third-quarter 2015 results before the opening bell on Oct 27, 2015. In the preceding quarter, Spirit AeroSystems delivered a positive earnings surprise of 12.37%. Also, the company has delivered positive earnings surprises in all of the last four quarters with an average beat of 13.52%. Let's see how things are shaping up prior to this announcement.

Factors to Consider

On its second quarterearnings call the company revealed that it has made meaningful progress on Airbus Group's A350 program but deliveries are going to remain flat in the third quarter. Hence, the company is expected to have built up inventory on the A350 over the August time frame.

Other significant accomplishments in the quarter include the completion of the first fuselage to Bell Helicopter for the Joint Multi-Role Technology Demonstrator (JMR-TD) program.

Spirit AeroSystems is also associated with Boeing's BA 737 commercial airline program. 737 is currently the best-selling single-aisle airplane with demand increasing each passing day. Moreover, Boeing's decision to ramp up the 737 Next Generation production rate in response to strong market demand will prove beneficial for Spirit AeroSystems as well. The company has worked on all Boeing programs, including building about 70% of the 737s, which currently has a production rate of 42 airplanes per month.

Spirit AeroSystems has implemented cost-saving initiatives and is still working to lower costs by reducing overhead expenses. In addition, the company has improved productivity in its ongoing projects.

Earnings Whispers?

Our proven model does not conclusively show that Spirit AeroSystems is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here.

Zacks ESP: Spirit AeroSystems has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 94 cents.

Zacks Rank: Spirit AeroSystems carries a Zacks Rank #2, which when combined with a 0.00% ESP makes a surprise prediction uncertain this season.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies tied to the aerospace and defense industry worth considering on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter.

Northrop Grumman Corp. NOC has an earnings ESP of +4.07% and carries a Zacks Rank #2 (Buy).

General Dynamics Corp. GD has an earnings ESP of +4.76% and carries a Zacks Rank #3 (Hold).

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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

NORTHROP GRUMMN (NOC): Free Stock Analysis Report

BOEING CO (BA): Free Stock Analysis Report

GENL DYNAMICS (GD): Free Stock Analysis Report

SPIRIT AEROSYS (SPR): Free Stock Analysis Report

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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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