Spirit AeroSystems Holdings, Inc. (SPR - Free Report) is set to report second-quarter 2020 results on Aug 4, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 44.37%.
In the trailing four quarters, the company came up with a negative earnings surprise of 4.60%, on average.
Let's take a closer look at the factors influencing Spirit AeroSystems’ upcoming results.
Factors to Consider
Spirit AeroSystems' shipset deliveries may have once again tumbled in the second quarter, as both its major customers, Boeing (BA - Free Report) and Airbus (EADSY - Free Report) , have been struggling financially due to the drastic impacts of the coronavirus pandemic. As Spirit AeroSystems generates a huge chunk of its revenues from supplies made to Boeing and Airbus, a poor performance by these jet makers is likely to have negatively impacted its quarterly revenues.
In line with such events, the Zacks Consensus Estimate for second-quarter revenues is pegged at $806 million, indicating a 60% plunge from the year-ago quarter’s reported figure.
During the first quarter of 2020, the company incurred several significant expenses related to the Boeing-directed 737 MAX production suspension, as well as the impact of the COVID-19 pandemic. Spirit AeroSystems recognized lower margins and also incurred excess capacity costs and restructuring expenses due to the production suspension on 737 MAX aircraft, starting Jan 1. Since Boeing has only started a low-rate production of the 737 jets and its return to service is yet to be resumed, we may expect these costs to have affected Spirit AeroSystems’ results in the soon-to-be-reported quarter.
Moreover, during the first-quarter earnings call, the company's management, based on preliminary assessments, anticipated incurring an incremental forward loss of approximately $70-$90 million from the 787 program in the second quarter. Additionally, it also expected to incur an incremental forward loss of approximately $15-$20 million from the A350 fuselage program in the second quarter. Therefore, we remain skeptical about the company’s earnings performance in the quarter to be reported.
In line with this, the Zacks Consensus Estimate for Spirit AeroSystems’ second-quarter loss stands at $1.19 per share against earnings of $1.71 reported in the prior-year quarter.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Spirit AeroSystems this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Spirit AeroSystems has an Earnings ESP of -18.54% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Spirit Aerosystems Holdings, Inc. Price and EPS Surprise
Here is a stock from the Aerospace sector you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this season.
CurtissWright Corporation (CW - Free Report) is scheduled to report second-quarter 2020 earnings on Aug 3. It has an Earnings ESP of +13.62% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
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