It has been about a month since the last earnings report for Spirit Aerosystems (SPR). Shares have added about 23.4% 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 reported fourth-quarter 2023 adjusted earnings of 48 cents per share, which missed the Zacks Consensus Estimate of $1.33 by 63.9%. However, the bottom line improved from a loss of $1.46 per share incurred in the year-ago quarter.
Barring one-time adjustments, the company recorded GAAP earnings of 52 cents per share against a loss of $2.32 in the prior-year period.
Spirit AeroSystems reported an adjusted loss of $4.02 per share for 2023, wider than the Zacks Consensus Estimate of a loss of $3.33. The full-year loss also widened from the year-ago quarter’s reported loss of $2.81 per share.
Highlights of the Release
Total revenues of $1,813 million surpassed the Zacks Consensus Estimate of $1,739 million by 4.3%. Also, the top line rose 37% on a year-over-year basis, driven by higher production deliveries on Commercial programs and higher Defense and Space and Aftermarket revenues.
Total revenues were $6.05 billion for 2023, which beat the Zacks Consensus Estimate of $5.98 billion by 1.2%. The top line also rose 20% from $5.03 billion reported in the year-ago quarter.
The company’s backlog at the end of the fourth quarter totaled $49 billion, up from the prior quarter’s $42.2 billion.
Segmental Performance
Commercial Segment: Revenues in the segment increased 42.6% year over year to $1,517.1 million. The upside was due to higher production across all programs and a favorable pricing impact on the Boeing 787 program.
The operating profit was $249.7 million against an operating loss of $79.4 million in the year-ago period.
Defense & Space: The segment recorded revenues of $205.3 million, up 12.1% year over year, driven by increased activity on development programs and higher production on the KC-46 Tanker program.
The operating income decreased 82.1% to $3.7 million from $20.7 million in the prior-year quarter.
Aftermarket: This segment’s top line improved 24.1% year over year to $90.5 million, driven by higher spare part sales.
The operating profit increased 128.3% year over year to reach $21 million.
Operational Highlights
Total operating costs and expenses rose 10.7% year over year to $1,614.6 million due to the higher cost of sales.
SPR’s operating income in fourth-quarter 2023 totaled $198.3 million against the operating loss of $138.8 million in the prior-year quarter. This increase was mainly due to favorable changes in estimates and a material right obligation liability reversal recognized in the fourth quarter of 2023. Also, the favorable impact of the Boeing Memorandum of Agreement executed in October 2023 on the Boeing 787 program has contributed to this operating income improvement.
Financial Position
As of Dec 31, 2023, Spirit AeroSystems had $823.5 million in cash and cash equivalents compared with $658.6 million as of Dec 31, 2022.
The long-term debt as of Dec 31, 2023, totaled $4,018.7 million compared with $3,814.9 million as of Dec 31, 2022.
Cash outflow from operating activities amounted to $226.1 million during 2023 compared with cash outflow of $394.6 million recorded a year ago.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted -22.26% due to these changes.
VGM Scores
At this time, Spirit Aerosystems has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 C. 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 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 belongs to the Zacks Aerospace - Defense Equipment industry. Another stock from the same industry, Hexcel (HXL), has gained 8% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Hexcel reported revenues of $457.5 million in the last reported quarter, representing a year-over-year change of +6.5%. EPS of $0.43 for the same period compares with $0.40 a year ago.
For the current quarter, Hexcel is expected to post earnings of $0.44 per share, indicating a change of -12% from the year-ago quarter. The Zacks Consensus Estimate has changed -3% 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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