Why Spirit Aerosystems (SPR) Stock Is Surging This Afternoon

NEW YORK (TheStreet) -- Shares of Spirit Aerosystems Holdings  (SPR) are surging, up 5.19% to $32.01, after reporting first quarter 2014 financial results that showed revenues were $1.7 billion, up from $1.4 billion for the same period of 2013.

The non-original equipment manufacturer aircraft parts designers and manufacturers of commercial aerostructures said operating income was $194 million, up from $145 million for the same period in 2013, driven by increased volume and favorable cumulative catch-up adjustments on mature programs.

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Net income for the quarter was $154 million, or $1.07 per fully diluted share, compared to net income of $81 million, or 57 cents per fully diluted share, in the same period of 2013. 

The company's revenue and fully diluted earnings per share guidance remains unchanged for 2014.

TheStreet Ratings team rates SPIRIT AEROSYSTEMS HOLDINGS as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SPIRIT AEROSYSTEMS HOLDINGS (SPR) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SPR's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 4.8%. 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.
  • Compared to its closing price of one year ago, SPR's share price has jumped by 53.14%, exceeding the performance of the broader market during that same time frame. Although SPR had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
  • SPR's debt-to-equity ratio of 0.79 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.73 is weak.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Aerospace & Defense industry and the overall market, SPIRIT AEROSYSTEMS HOLDINGS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $61.30 million or 80.15% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: SPR Ratings Report
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