Spirit AeroSystems (SPR): Assessing Valuation After Recent Momentum and Share Price Gains

Spirit AeroSystems Holdings (SPR) has caught the eye of investors after recent price swings, with its stock gaining nearly 2% in a day and climbing 5% over the past week. This move adds to a month filled with mixed signals for the aircraft component manufacturer.

See our latest analysis for Spirit AeroSystems Holdings.

After a rocky few months, Spirit AeroSystems Holdings has started to find some momentum, with the 1.84% jump in share price this week standing out alongside a strong 27% one-year total shareholder return. Momentum is building again, suggesting investors are looking past recent volatility toward the company’s underlying growth potential.

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With shares showing fresh signs of life yet trading close to analyst targets, the central question looms: Is Spirit AeroSystems trading at an attractive discount, or have markets already priced in the company’s recovery prospects?

Price-to-Sales Ratio of 0.8x: Is it justified?

Spirit AeroSystems’ shares trade at a price-to-sales (P/S) ratio of just 0.8x, which is strikingly low compared to both its industry and peer group. With a last close price of $40.31, the market appears to be discounting the company’s near-term unprofitability while potentially overlooking its recovery prospects.

The price-to-sales ratio measures how much investors are willing to pay for each dollar of the company's revenue, a key metric for firms that are not currently profitable. For a manufacturing and aerospace business like Spirit AeroSystems, low profitability often makes price-to-sales a more reliable valuation gauge than earnings multiples.

At 0.8x, Spirit AeroSystems is priced well below its US Aerospace & Defense industry average of 3.3x and peers at 13.6x. This deep discount may reflect skepticism about the speed of its turnaround or signal an undervalued opportunity if revenue and margins improve as forecasted. Notably, however, the SWS fair P/S ratio is estimated to be just 0.4x, indicating the market may still be a bit optimistic compared to some fair value models.

Explore the SWS fair ratio for Spirit AeroSystems Holdings

Result: Price-to-Sales Ratio of 0.8x (UNDERVALUED)

However, ongoing net losses and a share price now above analyst targets could pressure investor sentiment if operational improvements stall or if recovery takes longer than expected.

Find out about the key risks to this Spirit AeroSystems Holdings narrative.

Another View: DCF Model Suggests Even Deeper Value

While the price-to-sales ratio shows Spirit AeroSystems as undervalued compared to peers, our SWS DCF model takes this analysis further. It estimates the company's fair value at $214.86 per share, which is significantly higher than the current trading price. This indicates an even greater potential upside, but are the model’s optimistic assumptions realistic?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Spirit AeroSystems Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Spirit AeroSystems Holdings Narrative

If you see the story differently, or want to explore the numbers on your own terms, building your own take is quick and easy in just a few minutes. Do it your way

A great starting point for your Spirit AeroSystems Holdings research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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