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What's in Store for Spirit AeroSystems' (SPR) Q4 Earnings?

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Spirit AeroSystems Holdings, Inc. (SPR - Free Report) is set to report fourth-quarter 2020 results on Feb 23, before market open. In the last reported quarter, the company delivered an earnings surprise of 18.79%.

In the trailing four quarters, the company, however, came up with a negative earnings surprise of 19.53%, on average.

Let's take a closer look at the factors influencing Spirit AeroSystems’ upcoming results.

Factors to Consider

Deliveries of shipsets made by Spirit AeroSystems might have once again tumbled in the fourth 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 on commercial aerospace. Notably, the company delivered a total of 606 shipsets for Boeing's 737 aircraft in 2019, whereas in 2020, it only delivered 72 shipsets, as directed by Boeing. This will result in a massive 88% decline in this year’s delivery. This might have had an adverse impact on the fourth-quarter results as well.

Moreover, in the third quarter, total shipset deliveries to Airbus decreased 33.5% year over year, led by decreased production of the A320 and A350 programs. Boeing too dropped its 787 production rates, the delivery for which has also remained lower during the fourth quarter.  In particular, the jet giant made zero deliveries of 787 for the month of December. Such dearth of deliveries is expected to have adversely impacted Spirit AeroSystems’ fourth-quarter top line.

Notably, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $910 million, indicating a 53.6% 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. Notably, this trend is likely to have continued in the fourth quarter as well and thus, might have weighed on the company’s soon-to-be-reported quarter’s bottom-line performance.

The Zacks Consensus Estimate for Spirit AeroSystems’ fourth-quarter loss stands at 67 cents per share, suggesting a significant deterioration against earnings of 79 cents reported in the prior-year quarter.

During the third-quarter earnings call, the company revealed that there could be a one-time cash outflow of $35 million in the fourth quarter related to restructuring activities. Spirit AeroSystems’ cash flow statement in the upcoming release should duly reflect this.

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 -20.66%. 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

A Recent Defense Release

Lockheed Martin Corp. (LMT - Free Report) reported fourth-quarter 2020 earnings from continuing operations of $6.38 per share, in line with the Zacks Consensus Estimate.

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