UK Markets closed

What's in Store for Spirit AeroSystems' (SPR) Q3 Earnings?

Zacks Equity Research
·4-min read

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.

Earnings Whispers

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 and EPS Surprise
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%.

Have You Seen Zacks’ 2020 Election Stock Report?

The upcoming election could be a massive buying opportunity for savvy investors. Trillions of dollars will shift into new market sectors after the election. The question is, which sectors will soar for each candidate? Zacks has put together a new special report to help readers like you target big profits.

The 2020 Election Stock Report reveals specific stocks you’ll want to own immediately after the results are announced – 6 if Trump wins, 6 if Biden wins. Past election reports have led investors to gains of +71%, +83%, even +185% in the following months. This year’s picks could be even more lucrative.

Check out Zacks’ 2020 Election Stock Report >>


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
 
The Boeing Company (BA) : Free Stock Analysis Report
 
General Dynamics Corporation (GD) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Spirit Aerosystems Holdings, Inc. (SPR) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research