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Spirit Airlines (SAVE) Stock Down Despite Q1 Earnings Beat
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Shares of Spirit Airlines, Inc. (SAVE - Free Report) declined 5.9% on Apr 26 to close the trading session at $35.40. In fact, the stock was down despite this low-cost carrier posting better-than-expected earnings per share yesterday. Spirit’s first-quarter earnings per share came in at 44 cents (excluding $1.10 from non-recurring items), a penny ahead of the Zacks Consensus Estimate.
Why This Contrasting Scenario
Despite an earnings beat in the first quarter, investors were visibly displeased due to a year-over-year decline in the metric. High fuel costs were primarily responsible for the bottom-line contraction. Average economic fuel cost per gallon surged 21.5% to $2.15 in the reported quarter.
The upsurge in fuel costs was chiefly responsible for a 39.8% increase in total operating expenses. This apart, expenses on salaries, wages and other benefits surged 22%. Unit costs (excluding fuel and special items) decreased 5%. However, the decline was more than the anticipated figure of 3% due to the new contract with its pilots.
This Miramar, FL-based carrier’s struggles on the top-line front also disappointed investors. The carrier recorded revenues of $704.1 million, missing the Zacks Consensus Estimate of $705 million. The top line, however, grew substantially year over year owing to healthy passenger revenues.
Notably, the most disturbing aspect of this Zacks Rank #3 (Hold) carrier’s first-quarter top-line performance was the 2.4% decline in total revenue per available seat miles (a key measure of unit revenue). This key metric was hurt by the 1.7% decrease in operating yields and a 4.1% increase in average stage length. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Load factor (% of seats filled by passengers) decline of 60 basis points to 81% was another negative aspect of the earnings report. The metric was down as traffic growth (21.4%) was outpaced by capacity expansion (22.3%) during the reported quarter.
Spirit Airlines, Inc. Price, Consensus and EPS Surprise
Apart from the below-par earnings report, Spirit Airlines’ second-quarter 2018 guidance also disappointed investors and contributed to the stock price decline. The company envisions capacity (available seat miles) to expand 29% year over year in the quarter. TRASM is expected to decline in the range of 6.5-7.5%.
Fuel costs are anticipated to increase further to $2.23 per gallon in the second quarter. Adjusted unit costs ex-fuel is estimated to be down 7.5-8.5%. For 2018, the carrier expects capacity to rise 22.5%. Adjusted CASM ex-fuel is predicted to be down 3-4% in the year.
Upcoming Releases
Investors interested in the broader Zacks Transportation industry are keenly awaiting first-quarter earnings reports from key players like C.H. Robinson Worldwide, Inc. (CHRW - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Copa Holdings, S.A. (CPA - Free Report) in the coming days. While C.H. Robinson Worldwide is scheduled to report on May 1, Expeditors and Copa Holdings are scheduled to do the same on May 8 and May 9, respectively.
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Spirit Airlines (SAVE) Stock Down Despite Q1 Earnings Beat
Shares of Spirit Airlines, Inc. (SAVE - Free Report) declined 5.9% on Apr 26 to close the trading session at $35.40. In fact, the stock was down despite this low-cost carrier posting better-than-expected earnings per share yesterday. Spirit’s first-quarter earnings per share came in at 44 cents (excluding $1.10 from non-recurring items), a penny ahead of the Zacks Consensus Estimate.
Why This Contrasting Scenario
Despite an earnings beat in the first quarter, investors were visibly displeased due to a year-over-year decline in the metric. High fuel costs were primarily responsible for the bottom-line contraction. Average economic fuel cost per gallon surged 21.5% to $2.15 in the reported quarter.
The upsurge in fuel costs was chiefly responsible for a 39.8% increase in total operating expenses. This apart, expenses on salaries, wages and other benefits surged 22%. Unit costs (excluding fuel and special items) decreased 5%. However, the decline was more than the anticipated figure of 3% due to the new contract with its pilots.
This Miramar, FL-based carrier’s struggles on the top-line front also disappointed investors. The carrier recorded revenues of $704.1 million, missing the Zacks Consensus Estimate of $705 million. The top line, however, grew substantially year over year owing to healthy passenger revenues.
Notably, the most disturbing aspect of this Zacks Rank #3 (Hold) carrier’s first-quarter top-line performance was the 2.4% decline in total revenue per available seat miles (a key measure of unit revenue). This key metric was hurt by the 1.7% decrease in operating yields and a 4.1% increase in average stage length. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Load factor (% of seats filled by passengers) decline of 60 basis points to 81% was another negative aspect of the earnings report. The metric was down as traffic growth (21.4%) was outpaced by capacity expansion (22.3%) during the reported quarter.
Spirit Airlines, Inc. Price, Consensus and EPS Surprise
Spirit Airlines, Inc. Price, Consensus and EPS Surprise | Spirit Airlines, Inc. Quote
Disappointing Outlook
Apart from the below-par earnings report, Spirit Airlines’ second-quarter 2018 guidance also disappointed investors and contributed to the stock price decline. The company envisions capacity (available seat miles) to expand 29% year over year in the quarter. TRASM is expected to decline in the range of 6.5-7.5%.
Fuel costs are anticipated to increase further to $2.23 per gallon in the second quarter. Adjusted unit costs ex-fuel is estimated to be down 7.5-8.5%. For 2018, the carrier expects capacity to rise 22.5%. Adjusted CASM ex-fuel is predicted to be down 3-4% in the year.
Upcoming Releases
Investors interested in the broader Zacks Transportation industry are keenly awaiting first-quarter earnings reports from key players like C.H. Robinson Worldwide, Inc. (CHRW - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Copa Holdings, S.A. (CPA - Free Report) in the coming days. While C.H. Robinson Worldwide is scheduled to report on May 1, Expeditors and Copa Holdings are scheduled to do the same on May 8 and May 9, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>