Long-established in the Aerospace & Defense industry, Spirit AeroSystems Holdings Inc (SPR, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 2.8%, juxtaposed with a three-month change of -40.15%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Spirit AeroSystems Holdings Inc.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 2/10
- 2. Profitability rank: 6/10
- 3. Growth rank: 1/10
- 4. GF Value rank: 4/10
- 5. Momentum rank: 5/10
Based on the above method, GuruFocus assigned Spirit AeroSystems Holdings Inc the GF Score of 59 out of 100, which signals poor future outperformance potential.
Understanding Spirit AeroSystems Holdings Inc Business
Spirit AeroSystems Holdings Inc, with a market cap of $1.94 billion, designs and manufactures aerostructures, particularly fuselages, for commercial and military aircraft. The company was spun out of Boeing in 2005, and it is the largest independent supplier of aerostructures. Boeing and Airbus are the firm's primary customers, with Boeing composing roughly 80% of annual revenue and Airbus composing roughly 15% of revenue. The company is highly exposed to Boeing's 737 program, which generally accounts for about half of the company's revenue. However, with sales of $5.39 billion and an operating margin of -7.02%, the company's financial health is a concern.
Financial Strength Breakdown
Spirit AeroSystems Holdings Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0 positions it worse than 0% of 188 companies in the Aerospace & Defense industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Scoreis just 1.07, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.13 indicates a struggle in handling existing debt levels.
Growth Prospects
A lack of significant growth is another area where Spirit AeroSystems Holdings Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -13.8 per year over the past three years, which underperforms worse than 85% of 260 companies in the Aerospace & Defense industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, Spirit AeroSystems Holdings Inc predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's weak financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Spirit AeroSystems Holdings Inc has a rich history in the Aerospace & Defense industry, its current financial health and growth prospects raise concerns about its future performance. Investors should tread carefully and consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
