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Spirit Airlines (SAVE) Up 5.5% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Spirit Airlines, Inc. (SAVE - Free Report) . Shares have added about 5.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Third Quarter Earnings
Spirit Airlines’ third-quarter earnings (excluding 7 cents from non-recurring items) came in at 94 cents per share, beating the Zacks Consensus Estimate of 90 cents. The bottom line however, plunged 24.2% on a year-over-year basis.
Spirit Airlines reported operating revenues of $687.2 million, marginally ahead of the Zacks Consensus Estimate $686.6 million. The top line improved 10.6% year over year owing to a 14% rise in non-ticket revenues.
In the reported quarter, total revenue per available seat mile decreased 6.3% due to low passenger yields from aggressive pricing action.Load factor (percentage of seats filled by passengers) decreased to 84% from 86% in the year-ago quarter. Load factor fell as traffic growth (15.2%) was outpaced by capacity expansion (18%) during the reported quarter.
Cost per available seat mile (CASM), excluding special items, and fuel slipped 1.1% on the back of lower maintenance and salaries, wages and benefits per available seat mile. Adjusted operating expense in the third quarter climbed 20.2% to $574.75 million.
The company’s board has recently authorized a share repurchase program worth up to $100 million in aggregate value. The date of expiration of the authorization is Oct 25, 2018.
Q4 Guidance
The company expects capacity (available seat miles) to expand 17.5% year over year in the fourth quarter. Total revenue per available seat mile (TRASM) is expected to decline in the range of 4-6% in the fourth quarter. While Adjusted CASM ex-fuel is estimated to be down 3-4% in the final quarter of 2017.
2018 Guidance
For full-year 2018, the carrier expects capacity to rise between 22% and 25% year over year. While Adjusted CASM ex-fuel is predicted to be down in the band of 3-5%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter. In the past month, the consensus estimate has shifted by 13.8% due to these changes.
VGM Scores
At this time, Spirit Airlines' stock has an average Growth Score of C, though it lags on the momentum front with an F. The stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Spirit Airlines (SAVE) Up 5.5% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Spirit Airlines, Inc. (SAVE - Free Report) . Shares have added about 5.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Third Quarter Earnings
Spirit Airlines’ third-quarter earnings (excluding 7 cents from non-recurring items) came in at 94 cents per share, beating the Zacks Consensus Estimate of 90 cents. The bottom line however, plunged 24.2% on a year-over-year basis.
Spirit Airlines reported operating revenues of $687.2 million, marginally ahead of the Zacks Consensus Estimate $686.6 million. The top line improved 10.6% year over year owing to a 14% rise in non-ticket revenues.
In the reported quarter, total revenue per available seat mile decreased 6.3% due to low passenger yields from aggressive pricing action.Load factor (percentage of seats filled by passengers) decreased to 84% from 86% in the year-ago quarter. Load factor fell as traffic growth (15.2%) was outpaced by capacity expansion (18%) during the reported quarter.
Cost per available seat mile (CASM), excluding special items, and fuel slipped 1.1% on the back of lower maintenance and salaries, wages and benefits per available seat mile. Adjusted operating expense in the third quarter climbed 20.2% to $574.75 million.
The company’s board has recently authorized a share repurchase program worth up to $100 million in aggregate value. The date of expiration of the authorization is Oct 25, 2018.
Q4 Guidance
The company expects capacity (available seat miles) to expand 17.5% year over year in the fourth quarter. Total revenue per available seat mile (TRASM) is expected to decline in the range of 4-6% in the fourth quarter. While Adjusted CASM ex-fuel is estimated to be down 3-4% in the final quarter of 2017.
2018 Guidance
For full-year 2018, the carrier expects capacity to rise between 22% and 25% year over year. While Adjusted CASM ex-fuel is predicted to be down in the band of 3-5%.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter. In the past month, the consensus estimate has shifted by 13.8% due to these changes.
VGM Scores
At this time, Spirit Airlines' stock has an average Growth Score of C, though it lags on the momentum front with an F. The stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.