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Should Value Investors Consider Spirit Airlines (SAVE) Stock?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Spirit Airlines, Inc. (SAVE - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Spirit Airlines has a trailing twelve months PE ratio of 14.4, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 22.3. If we focus on the long-term PE trend, Spirit Airlines’ current PE level puts slightly below its midpoint of over the past five years. Moreover, the current level stands way below the highs for the stock, indicating that it could be a solid entry point.
Further, the stock’s PE also compares favorably with the Zacks Transportation sector’s trailing twelve months PE ratio, which stands at 20.4. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Spirit Airlines’ has forward PE of 15.3x, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Spirit Airlines has a P/S ratio of about 1.3. This is much lower than the S&P 500 average, which comes in at 3.5 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Spirit Airlines currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Spirit Airlines a solid choice for value investors, and some of its other key metrics make this pretty clear too.
What About the Stock Overall?
While Spirit Airlines might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of D and a Momentum score of A. This gives SAVE a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current year has seen three estimates go higher in the past thirty days compared to none lower, while the next year estimate has seen four up and none down in the same time period.
As a result, the current year consensus estimate has increased nearly 0.6% in the past one month, while the next year estimate has moved up by 1.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Even though the company has better estimates trend, the stock has just a Zacks Rank #3 (Hold). That is why we are looking for in-line performance from the company in the near term.
Bottom Line
Spirit Airlines is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. The stock belongs to an industry which is ranked among the Top 37%, indicating that broader factors are favorable for the company. Further, over the past three months, its industry has outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Should Value Investors Consider Spirit Airlines (SAVE) Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Spirit Airlines, Inc. (SAVE - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Spirit Airlines has a trailing twelve months PE ratio of 14.4, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 22.3. If we focus on the long-term PE trend, Spirit Airlines’ current PE level puts slightly below its midpoint of over the past five years. Moreover, the current level stands way below the highs for the stock, indicating that it could be a solid entry point.
Further, the stock’s PE also compares favorably with the Zacks Transportation sector’s trailing twelve months PE ratio, which stands at 20.4. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Spirit Airlines’ has forward PE of 15.3x, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Spirit Airlines has a P/S ratio of about 1.3. This is much lower than the S&P 500 average, which comes in at 3.5 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Spirit Airlines currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Spirit Airlines a solid choice for value investors, and some of its other key metrics make this pretty clear too.
What About the Stock Overall?
While Spirit Airlines might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of D and a Momentum score of A. This gives SAVE a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current year has seen three estimates go higher in the past thirty days compared to none lower, while the next year estimate has seen four up and none down in the same time period.
As a result, the current year consensus estimate has increased nearly 0.6% in the past one month, while the next year estimate has moved up by 1.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Spirit Airlines, Inc. Price and Consensus
Spirit Airlines, Inc. price-consensus-chart | Spirit Airlines, Inc. Quote
Even though the company has better estimates trend, the stock has just a Zacks Rank #3 (Hold). That is why we are looking for in-line performance from the company in the near term.
Bottom Line
Spirit Airlines is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. The stock belongs to an industry which is ranked among the Top 37%, indicating that broader factors are favorable for the company. Further, over the past three months, its industry has outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>