Spirit AeroSystems (SPR - Free Report) , in its recently concluded Investor Day unveiled the roadmap to earn in excess of $1 billion each from two new business units — Fabrication and Defense — over the next five years. The company already had a strong presence in these areas and expects to build up from its current position and maintain dominance in these areas.
Initiatives to Reach Target
For expansion of its business in Fabrication area, Spirit AeroSystems has developed centers of excellence in Wichita for five-axis complex parts, established a three and four-axis center of excellence at its facility in McAlester, OK. Also, it is expanding its Malaysia site where it does complex assemblies. The company aims to achieve its five-year target by expanding business with its current commercial and military customers and supplying materials to new customers.
The company supplies more than 38,000 unique parts to support its commercial and defense customers and is investing in R&D activities to provide better quality product.
We believe the approval of higher-than-expected defense expenditure for fiscal 2018 will boost the prospect of Spirit AeroSystems’ defense orders. The $700 billion defense expenditure for fiscal 2018 will definitely boost orders and benefit secondary defense product suppliers like Spirit AeroSystems.
The company is presently assisting Lockheed Martin Corporation (LMT - Free Report) , The Boeing Company (BA - Free Report) and Northrop Grumman Corporation (NOC - Free Report) in various important programs. With the existing defense customers and the prospective new ones, the company is well poised to achieve its defense order target.
Thanks to its quality product offering, the company has registered an influx of fresh orders, resulting in a substantial increase in its backlog. Backlog at the end of second-quarter 2017 was $46 billion compared with $29 billion at the end of 2016.
The orders received from Boeing and Airbus in the first half of 2017, are the primary reasons for the rise in backlog of the company.
Spirit AeroSystems currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In last 12 months, Spirit AeroSystems’ stock has gained 71.6%, outperforming the 47% rally of the industry it belongs to.
Its strong backlog, wide product offering and initiatives to further expand business will drive its performance in the long run.
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