Spirit AeroSystems Holdings, Inc. SPR is set to report third-quarter 2020 results on Nov 3, before market open. In the last reported quarter, the company delivered a negative earnings surprise of 91.60%.
In the trailing four quarters, the company came up with a negative earnings surprise of 28.57%, on average.
Let's take a closer look at the factors influencing Spirit AeroSystems’ upcoming results.
Factors to Consider
Spirit AeroSystems' shipset deliveries might have once again tumbled in the third quarter, as both its major customers, Boeing BA and Airbus, have been struggling financially due to the drastic impacts of the coronavirus pandemic on commercial aerospace. Notably, the company delivered a total of 606 shipsets for Boeing's 737 aircraft in 2019, whereas in 2020 it will only deliver 72 shipsets, as directed by Boeing. This will result in a massive 88% decline in this year’s delivery.
Further, Boeing has dropped its 787 production rates, the delivery for which has also been lower during the third quarter. Such dearth of deliveries is expected to have adversely impacted Spirit AeroSystems’ third-quarter top line.
The Zacks Consensus Estimate for third-quarter revenues is pegged at $772 million, indicating a 59.8% plunge from the year-ago quarter’s reported figure.
Over the past couple of quarters, the company has been incurring excess capacity costs, abnormal production costs related to COVID-19, restructuring expenses and other expenses related to the Boeing 787 and Airbus A350 programs. This trend is likely to have continued in the third quarter and thus, might have weighed on the company’s soon-to-be-reported quarter’s bottom-line performance.
During the second-quarter earnings call, the company's management, based on preliminary assessments, anticipated incurring an incremental forward loss of approximately $25-$35 million on the 787 program in the third quarter. Additionally, it is expected to incur an incremental forward loss of approximately $13-$20 million from the A350 program in the third quarter. Consequently, we remain skeptical about the company’s earnings performance in the quarter to be reported.
The Zacks Consensus Estimate for Spirit AeroSystems’ third-quarter loss stands at $1.65 per share against earnings of $1.38 reported in the prior-year quarter.
Our proven model does not conclusively predict an earnings beat for Spirit AeroSystems this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But this is not the case here.
Earnings ESP: The company’s Earnings ESP is -1.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Spirit AeroSystems currently carries a Zacks Rank #4 (Sell).
Spirit Aerosystems Holdings, Inc. Price and EPS Surprise
Spirit Aerosystems Holdings, Inc. price-eps-surprise | Spirit Aerosystems Holdings, Inc. Quote
Recent Defense Releases
Lockheed Martin LMT, a Zacks Rank #3 company, reported third-quarter 2020 earnings from continuing operations of $6.25 per share, which surpassed the Zacks Consensus Estimate of $6.07 by 3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
General Dynamics GD, a Zacks Rank #4 company, reported third-quarter 2020 earnings from continuing operations of $2.90 per share, which beat the Zacks Consensus Estimate of $2.85 by 1.8%.
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