Spirit AeroSystems Making Underappreciated Progress, But Orders Are Still Inadequate

While there are certainly aerospace supplier stocks that have returned to, or surpassed, their pre-pandemic levels, Spirit AeroSystems (NYSE:SPR) is most definitely not among them, as the shares have given back a lot of the rally that they, and other suppliers like Hexcel (HXL), Howmet (HWM), and Safran (OTCPK:SAFRY), enjoyed from late 2020 to around mid-2021. Management here has been implementing a range of improvements, but they haven't really taken full force yet, and the company continues to be undermined by a weak ramp in 737 MAX production at Boeing (BA).

I do believe that the company's efforts to diversify further into defense and aftermarket sales will pay off, as well as efforts to broaden/diversify the customer base and incorporate more automation and digitalization in the manufacturing and logistics processes. I also believe that the shares are meaningfully undervalued based upon the long-term benefits of those improvements and the eventual production increases at Boeing. The trick, as it were, is that investors are going to have to be patient for a while longer and there are still downside risks to that production normalization thesis.

 

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Spirit AeroSystems Making Underappreciated Progress, But Orders Are Still Inadequate