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Bear of the Day: Spirit Airlines (SAVE)

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When oil prices were low and the US dollar was riding high, Airplane stocks were soaring. Over the last year, the industry has returned 10.6%. Lagging well behind the rest of the airline industry, down 33.9% YTD, is today’s Bear of the Day, Spirit Airlines (SAVE - Free Report) .

Spirit Airlines, Inc. provides low-fare airline services. As of February 7, 2017, it operated approximately 420 daily flights to 59 destinations in the United States, the Caribbean, and Latin America. As of December 31, 2016, the company had a fleet of 95 Airbus single-aisle aircraft comprising 29 A319s, 45 A320ceos, 5 A320neos, and 16 A321ceos. It offers tickets through its call centers and airport ticket counters, as well as online through; and through various third parties, including online, traditional travel agents, and electronic global distribution systems. 

 Spirit Airlines is a Zacks Rank #5 (Strong Sell) because of multiple earnings estimate revisions to the downside. Over the last thirty days, eight analysts have dropped their EPS estimates for the current year while seven analysts have dropped their estimates for next year. The overall impact has cut down the Zacks Consensus Estimate for the current year from $4.21 to $3.68. Next year’s consensus has plummeted from $4.88 to $4.26. Based on these revisions, the current year EPS is slated to contract 10.82%.

That’s the bad news, the good news is that next year the company should return to EPS growth, with 15.57% year-over-year numbers projected. Revenue growth this year should come in around 15.86% in the face of the EPS contraction.

Not enough to convince investors to support the current share price though. After failing to break through the $60 level in May 2017 shares have been in a freefall. Following the most recent earnings report shares have gapped down and sold off under $40. The 50-day moving average looms above as overhead resistance around $48.

Investors looking for other ideas within the airlines industry should look at Zacks Rank #1 (Strong Buy) stocks Delta Airlines (DAL - Free Report) , Deutsche Lufthansa , Ryanair Holdings (RYAAY - Free Report) , and SkyWest (SKYW - Free Report) .

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