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Here's Why We Think Spirit AeroSystems Holdings (NYSE:SPR) Is Well Worth Watching

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

So if you're like me, you might be more interested in profitable, growing companies, like Spirit AeroSystems Holdings (NYSE:SPR). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

View our latest analysis for Spirit AeroSystems Holdings

How Fast Is Spirit AeroSystems Holdings Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years Spirit AeroSystems Holdings grew its EPS by 9.1% per year. That growth rate is fairly good, assuming the company can keep it up.

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One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Spirit AeroSystems Holdings's EBIT margins were flat over the last year, revenue grew by a solid 8.5% to US$7.6b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

NYSE:SPR Income Statement, August 27th 2019
NYSE:SPR Income Statement, August 27th 2019

Fortunately, we've got access to analyst forecasts of Spirit AeroSystems Holdings's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Spirit AeroSystems Holdings Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$8.1b company like Spirit AeroSystems Holdings. But we are reassured by the fact they have invested in the company. Given insiders own a small fortune of shares, currently valued at US$87m, they have plenty of motivation to push the business to succeed. That's certainly enough to make me think that management will be very focussed on long term growth.

Should You Add Spirit AeroSystems Holdings To Your Watchlist?

As I already mentioned, Spirit AeroSystems Holdings is a growing business, which is what I like to see. Just as polish makes silverware pop, the high level of insider ownership enhances my enthusiasm for this growth. The combination sparks joy for me, so I'd consider keeping the company on a watchlist. Of course, just because Spirit AeroSystems Holdings is growing does not mean it is undervalued. If you're wondering about the valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Although Spirit AeroSystems Holdings certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.