Rating Change #9
Spirit AeroSystems Holdings Inc
has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.2%. Since the same quarter one year prior, revenues rose by 20.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 55.37% to $102.70 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 34.34%.
- The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.84 is somewhat weak and could be cause for future problems.
- SPIRIT AEROSYSTEMS HOLDINGS has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SPIRIT AEROSYSTEMS HOLDINGS reported lower earnings of $1.34 versus $1.56 in the prior year. For the next year, the market is expecting a contraction of 98.5% in earnings ($0.02 versus $1.34).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Aerospace & Defense industry. The net income has significantly decreased by 299.7% when compared to the same quarter one year ago, falling from $67.30 million to -$134.40 million.
Spirit AeroSystems Holdings, Inc., through its subsidiaries, designs and manufactures commercial aerostructures in the United States and internationally. It operates in three segments: Fuselage Systems, Propulsion Systems, and Wing Systems. The company has a P/E ratio of 9.4, below the S&P 500 P/E ratio of 17.7. Spirit AeroSystems has a market cap of $1.87 billion and is part of the industrial goods sector and aerospace/defense industry. Shares are down 24.8% year to date as of the close of trading on Friday.
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