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Likely Coronavirus Impact on Spirit AeroSystems (SPR) Q1 Earnings

Zacks Equity Research

Spirit Aerosystems Holdings, Inc. SPR is set to release first-quarter 2020 results on May 6, before the opening bell.

In the last reported quarter, the company delivered a negative earnings surprise of 49.68%.

Moreover, it surpassed the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missing in the other two, the average negative surprise being 15.55%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

In April, Spirit AeroSystems released its preliminary financial results for first-quarter 2020, where revenues and net income were expected to take a hit and be significantly lower than the figures posted in the year-ago quarter.

During the first quarter, the company could only manage to deliver 324 aircraft ship sets, down from 453 in the year-ago quarter. This was because both Boeing BA and Airbus EADSY, Spirit AeroSystems' primary customers, succumbed to the drastic impacts of the coronavirus pandemic and had to forcefully suspend production until further notice.

As Spirit AeroSystems generates a huge chunk of its revenues from supplies made to Boeing and Airbus, these drastic effects of the pandemic on the aviation industry are likely to have negatively impacted its quarterly revenues. In line with such events, the Zacks Consensus Estimate for first-quarter revenues of $973 million suggests a notable decline of 50.6% from the year-ago quarter’s reported figure.

As announced during Spirit AeroSystems fourth-quarter earnings call, increasing costs associated with Boeing’s 737 production suspension and the fixed-cost absorption impact on account of decreased production rate of 787 jets might have affected first-quarter earnings. Additional restructuring costs are likely to get reflected in the company's soon-to-be-reported quarterly results.

The Zacks Consensus Estimate for Spirit AeroSystems’ first-quarter loss stands at $1.42 against the earnings of $1.68 reported in the prior-year quarter.

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

What the Zacks Model Unveils

Our proven model predicts 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.

Earnings ESP: The company’s Earnings ESP is +18.35%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Spirit Aerosystems carries a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Another Stock to Consider

Here is another defense company you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter.

Huntington Ingalls Industries HII has an Earnings ESP of +1.79% and a Zacks Rank #3.

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