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Trade-Ideas: Spirit AeroSystems Holdings (SPR) Is Today's "Dead Cat Bounce" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Spirit AeroSystems Holdings (SPR) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Spirit AeroSystems Holdings as such a stock due to the following factors:

  • SPR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $74.3 million.
  • SPR has traded 2.1 million shares today.
  • SPR is up 3.1% today.
  • SPR was down 19.6% yesterday.

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More details on SPR:

Spirit AeroSystems Holdings, Inc., through its subsidiaries, operates as a non-original equipment manufacturer (OEM) that designs and manufactures commercial aerostructures worldwide. It operates in three segments: Fuselage Systems, Propulsion Systems, and Wing Systems. SPR has a PE ratio of 183.2. Currently there are 8 analysts that rate Spirit AeroSystems Holdings a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Spirit AeroSystems Holdings has been 1.2 million shares per day over the past 30 days. Spirit AeroSystems has a market cap of $4.0 billion and is part of the industrial goods sector and aerospace/defense industry. The stock has a beta of 1.53 and a short float of 1.2% with 0.40 days to cover. Shares are down 22.2% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Spirit AeroSystems Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • SPR's revenue growth has slightly outpaced the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 10.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Aerospace & Defense industry. The net income increased by 169.7% when compared to the same quarter one year prior, rising from -$134.40 million to $93.70 million.
  • Net operating cash flow has significantly increased by 80.13% to $185.00 million when compared to the same quarter last year. In addition, SPIRIT AEROSYSTEMS HOLDINGS has also vastly surpassed the industry average cash flow growth rate of -9.48%.
  • The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.85 is somewhat weak and could be cause for future problems.
  • Powered by its strong earnings growth of 169.14% and other important driving factors, this stock has surged by 112.14% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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