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Spirit Aerosystems (SPR) Down 8.1% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Spirit Aerosystems (SPR). Shares have lost about 8.1% 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 Reports Q4 Loss, Revenues Rise Y/Y

 

Spirit AeroSystems reported a fourth-quarter 2022 adjusted loss of $1.46 per share, wider than the Zacks Consensus Estimate of a loss of 31 cents. The bottom line also widened significantly from the year-ago quarter’s loss of 84 cents per share.

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Barring one-time adjustments, Spirit AeroSystems reported a GAAP loss of $2.32 per share compared with a loss of $1.15 in the year-ago quarter. For the full-year 2022, SPR reported an adjusted loss of $3.46 per share, wider than the Zacks Consensus Estimate of a loss of $1.63 per share.

Highlights of the Release

Total revenues of $1,320 million lagged the Zacks Consensus Estimate of $1,378 million by 4.2%. However, the top line rose 23% on a year-over-year basis, driven by the higher production deliveries of the Boeing 737 and increased Defense and Space revenues.

For the full-year 2022, total revenues came in at $5.03 billion, missing the Zacks Consensus Estimate of $5.09 billion by 1.2%. However, net sales increased 27% year over year. The year-over-year rise was primarily due to higher production deliveries on the Boeing 737 and Airbus A320 and A220 programs and increased Aftermarket and Defense and Space revenues.

The backlog at the end of the fourth quarter of 2022 was $37 billion compared with $35 billion at the end of 2021.

Segmental Performance

Commercial Segment:Revenues in the segment increased 26% year over year to $1,064 million in the fourth quarter, driven by higher production revenues on the Boeing 737, 777 and Bombardier business jets programs. The operating loss widened to $79.4 million from an operating loss of $20.2 million in the year-ago quarter.

Defense & Space:The segment recorded revenues of $183.2 million in the reported quarter, up 20.5% year over year. The upside can be attributed to higher development activity.

The operating income in the fourth quarter increased 72.5% to $20.7 million from $12 million in the year-ago quarter.

Aftermarket:Revenues in the segment declined by 1.2% year over year to $72.9 million in the fourth quarter. The operating profit in the fourth quarter decreased 45.2% to $9.2 million.

Operational Highlights

Total operating costs and expenses rose 26.9% year over year to $1,458.9 million due to the higher cost of sales and increased SG&A expenses.

SPR’s operating loss came in at $139 million in the fourth quarter compared with the year-ago quarter’s loss of $79 million. The increase in the operating loss was primarily due to the absence of income related to the Aviation Manufacturing Jobs Protection Program, which was recognized in the fourth quarter of 2021.

Financial Position

As of Dec 31, 2022, Spirit AeroSystems had $658.6 million in cash and cash equivalents compared with $1,478.6 million as of Dec 31, 2021.

The long-term debt as of Dec 31, 2022 totaled $3,814.9 million compared with $3,742.7 million at the end of 2021.

The cash outflow from operating activities was $395 million in 2022 compared with the cash outflow of $63 million a year ago.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -81.25% due to these changes.

VGM Scores

At this time, Spirit Aerosystems has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Performance of an Industry Player

Spirit Aerosystems is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Hexcel (HXL), a stock from the same industry, has gained 3.9%. The company reported its results for the quarter ended December 2022 more than a month ago.

Hexcel reported revenues of $429.4 million in the last reported quarter, representing a year-over-year change of +19.2%. EPS of $0.40 for the same period compares with $0.16 a year ago.

For the current quarter, Hexcel is expected to post earnings of $0.40 per share, indicating a change of +81.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Hexcel. Also, the stock has a VGM Score of B.

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

Hexcel Corporation (HXL) : Free Stock Analysis Report

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