Shares of Spirit AeroSystems (NYSE:SPR) Holdings Inc. experienced a significant surge on Wednesday, following the announcement of an expanded production agreement with Boeing (NYSE:BA) Co. The Memorandum of Agreement (MoA) resulted in a 23.3% rise in Spirit's stock price, marking its largest one-day gain since March 2020. At the same time, Boeing's stock also rose by 1%, extending its three-day winning streak from a ten-month low.
The new agreement aims to address production issues, enhance market responsiveness, and ensure delivery assurance. This move comes after the disclosure of quality problems with the Boeing 737 Max in August, which led to delivery delays and a drop in Spirit's stock to an 11-year low of $14.84.
The recent agreement has brought a positive outlook for both companies, despite the challenging past. Spirit has been grappling with a significant debt burden and quickly burning through cash, as pointed out in the InvestingPro Tips. Yet, the company's management has been aggressively buying back shares, indicating confidence in the future of the company.
On the other hand, Boeing, a prominent player in the Aerospace & Defense industry, has been dealing with its own set of challenges. According to InvestingPro Tips, it suffers from weak gross profit margins and has been trading at a high EBITDA valuation multiple. Furthermore, the company's revenue growth has been accelerating, but analysts do not anticipate the company will be profitable this year.
InvestingPro's real-time metrics provide further insights. Spirit's market cap stands at 2260M USD, with a P/E ratio of -2.61. The company's revenue growth for LTM2023.Q2 was 20.31%, but it operates with a poor return on assets of -12.69%.
Boeing, on the other hand, has a market cap of 113.49B USD and a P/E ratio of -25.46. The company's revenue for LTM2023.Q2 was 73.61B USD, with a growth rate of 21.18%. However, Boeing's return on assets for the same period was -3.36%.
Despite experiencing a three-month plunge of 25.3% for Spirit and a 10.6% loss for Boeing, Spirit CEO Patrick Shanahan highlighted that the MoA would enhance supply chain performance and resilience. This development comes during a period when the S&P 500 index has seen a 4.7% loss.
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