Is Spirit AeroSystems (SPR) Undervalued or Overhyped? A Clash of Valuation Models and Market Sentiment

The debate over Spirit AeroSystems (SPR) has crystallized into a stark dichotomy: a discounted cash flow (DCF) model suggests the stock is trading at a steep discount to intrinsic value, while its low price-to-sales multiple (0.7x) reflects a market wary of operational risks. With a current stock price of $36.13 as of November 26, 2025, and a Q4 2025 earnings report that revealed a staggering $4.87-per-share loss-far worse than the estimated -$0.370 according to analysis-the tension between optimism and skepticism has never been more pronounced.

The DCF Case for Undervaluation

A DCF analysis from Simply Wall St estimates Spirit's fair value at $216.34, implying the stock is trading at a 83% discount to its projected intrinsic value. This model hinges on assumptions about future cash flows, which, while optimistic, are not entirely unfounded. According to company reports, the company's pending acquisition by Boeing, expected to close in Q4 2025 pending regulatory approvals, could stabilize its cash flow by integrating its critical aerospace components into Boeing's supply chain. Additionally, forward guidance projects annual revenue growth of 14.2% and earnings growth of 88.11%, metrics that underpin the DCF's bullish assumptions.

However, the DCF model's validity depends on the resolution of Spirit's operational challenges. The company's third-quarter 2025 results revealed a net loss of $6.16 per share, driven by $585 million in forward losses and $55 million in excess capacity costs. These figures underscore the fragility of the cash flow projections underpinning the DCF analysis.

Market Sentiment: A Cautionary Outlook

The market's skepticism is evident in Spirit's valuation metrics. At a price-to-sales ratio of 0.7x, the stock trades well below the U.S. Aerospace & Defense sector average of 3x. This discount reflects investor concerns about Spirit's balance sheet, including its negative equity position and reliance on customer advances for liquidity as reported.

Recent operational risks have further eroded confidence. Spirit's Q3 2025 results highlighted supply chain bottlenecks and production cost overruns on key programs like the Boeing 737 and Airbus A220. These issues, coupled with unfavorable cumulative catch-up adjustments totaling $14 million, have exacerbated cash outflows. The market's low valuation appears to price in a prolonged period of losses, with Spirit itself projecting continued operational deficits for the foreseeable future.

The Acquisition Uncertainty

The pending Boeing acquisition, initially valued at $4.7 billion, has introduced both hope and uncertainty. While regulatory approval was secured in October 2025, the transaction remains contingent on Boeing divesting certain Airbus-related operations and a Malaysian site. Until the deal closes, investors face a binary risk: the acquisition could provide a lifeline, but its failure would likely deepen the company's financial distress.

This uncertainty complicates the valuation debate. A DCF model assumes a stable path to profitability, yet the acquisition's outcome remains unresolved. Meanwhile, the market's low multiple appears to discount the stock until the transaction's risks are mitigated.

Is the Rebound Already Priced In?

Spirit's recent share price rebound-from a low of $28.50 in early October 2025 to $36.13 in late November as reported-suggests some optimism about the Boeing acquisition and potential cost synergies. However, this 27% increase may not fully reflect the DCF model's $216.34 fair value estimate. The gap between current price and projected intrinsic value implies that the market has yet to price in a full recovery, assuming the acquisition succeeds and operational efficiencies materialize.

Yet, the risks remain significant. Spirit's liquidity constraints, negative equity, and ongoing losses mean that even a successful acquisition could take years to translate into shareholder value. For investors, the question becomes whether the potential 500% upside from the DCF model justifies the risk of further declines if the acquisition falters or operational challenges persist.

Conclusion: A High-Risk, High-Reward Proposition

Spirit AeroSystems occupies a precarious position at the intersection of undervaluation and operational peril. The DCF model's $216.34 fair value estimate suggests a compelling long-term opportunity, but this hinges on the successful execution of the Boeing acquisition and the resolution of supply chain and cost overruns. Conversely, the market's 0.7x price-to-sales multiple reflects a realistic assessment of the company's near-term risks.

For investors, the key lies in risk tolerance. Those who believe in the transformative potential of the Boeing acquisition and the company's ability to streamline operations may view the current price as a bargain. However, the persistent operational headwinds and regulatory uncertainties mean that SPR remains a speculative bet rather than a safe value play. In the end, the answer to whether Spirit is undervalued or overhyped depends on whether one believes the DCF's optimistic future or the market's cautious present.