Can Low 777 Demand Hit Spirit AeroSystems' (SPR) Q4 Earnings?
Zacks Investment Research | Jan 29, 2018 08:55PM ET
Spirit AeroSystems Holdings, Inc. (NYSE:SPR) , a designer and manufacturer of aero structures for both commercial and defense aircraft, is set to release fourth-quarter 2017 results on Feb 2, before the opening bell.
Expectations of sales decline at Fuselage Systems might mar the company’s fourth-quarter results. However, growing demand for commercial jets is expected to boost sales.
Spirit Aerosystems Holdings, Inc. Price and EPS Surprise
Will Fuselage Systems Drive Growth?
Fuselage Systems, which represents more than 50% of total sales, has been a major growth driver for Spirit AeroSystems. Unfortunately, the top-line scenario for this segment is bleak for the yet-to-be-reported quarter. Evidently, the Zacks Consensus Estimate for the segment’s fourth-quarter sales is pegged at $791 million, reflecting year-over-year decline of 6.8%.
Boeing (NYSE:BA) being the primary client, the demand of its commercial jets influences Spirit AeroSystems’ prospects. Per Boeing’s fourth-quarter delivery numbers, a 38% drop was recorded in the deliveries of 777 model
which clearly shows declining demand. This in turn might have led Zacks analysts to slash top-line expectations for the Fuselage Systems segment.
Other Factors at Play
Although delivery numbers remained unimpressive for the 777 program of Boeing, other primary programs like 737 and 787 reflected solid growth. Therefore, the overall fourth-quarter growth story for Spirit AeroSystems remains impressive.
Demand for commercial airplanes has been rising on a steady improvement in passenger and freight traffic. As a result, the company’s long-term contracts with industry bellwethers like Boeing and Airbus Group (PA:AIR)
should help boost quarterly top and bottom-line figures.
The Zacks Consensus Estimate for Spirit AeroSystems’ fourth-quarter earnings reflects annual growth of 37.1% on 5.1% higher revenues.
What Does the Zacks Model Predict?
Our proven model does not conclusively show an earnings beat for Spirit AeroSystems this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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