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Here's Why You Should Hold Spirit Airlines (SAVE) Stock Now
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Spirit Airlines, Inc. (SAVE - Free Report) is benefiting from strong air-travel demand. Yet, rising fuel costs are worrisome.
Factors Favoring SAVE
Owing to an uptick in demand for leisure air travel, consolidated traffic (measured in revenue passenger miles) at Spirit rose 18% in the March quarter. To cater to this increased demand, capacity (measured in available seat miles) expanded to 12.7%. Load factor increased 3.6 points to 80.8% in the first quarter of 2023. Total operating revenue per available seat miles jumped 23.9% to 10.22 cents in the March quarter. The average yield increased 18.2% to 12.64 cents.
Expecting demand to stay strong, management anticipates second-quarter 2023 total revenues in the $1.46-$1.48 billion range. Adjusted operating margin is projected to be between 4.5% and 6.5%.
The carrier exited first-quarter 2023 with cash and cash equivalents of $1,516 million, above the current debt of $262 million, implying that the company has sufficient cash to meet its current debt obligations.
Key Risks
The current scenario of rising fuel costs does not bode well for the airline and is hurting its bottom line. Average fuel cost per gallon in the March quarter increased 16.3% year over year to $3.43. Fuel price per gallon is anticipated to be $2.60 in the second quarter of 2023.
Zacks Rank
SAVE currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Triton International Limited .
Copa Holdings, which presently flaunts a Zacks Rank #1 (Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can seethe complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and 2023, CPA’s earnings are expected to register 765.6% and 75.4% growth, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2 (Buy), is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. TRTN’s current ratio (a measure of liquidity) was 3.97 at the end of first-quarter 2023. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.
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Here's Why You Should Hold Spirit Airlines (SAVE) Stock Now
Spirit Airlines, Inc. (SAVE - Free Report) is benefiting from strong air-travel demand. Yet, rising fuel costs are worrisome.
Factors Favoring SAVE
Owing to an uptick in demand for leisure air travel, consolidated traffic (measured in revenue passenger miles) at Spirit rose 18% in the March quarter. To cater to this increased demand, capacity (measured in available seat miles) expanded to 12.7%. Load factor increased 3.6 points to 80.8% in the first quarter of 2023. Total operating revenue per available seat miles jumped 23.9% to 10.22 cents in the March quarter. The average yield increased 18.2% to 12.64 cents.
Expecting demand to stay strong, management anticipates second-quarter 2023 total revenues in the $1.46-$1.48 billion range. Adjusted operating margin is projected to be between 4.5% and 6.5%.
The carrier exited first-quarter 2023 with cash and cash equivalents of $1,516 million, above the current debt of $262 million, implying that the company has sufficient cash to meet its current debt obligations.
Key Risks
The current scenario of rising fuel costs does not bode well for the airline and is hurting its bottom line. Average fuel cost per gallon in the March quarter increased 16.3% year over year to $3.43. Fuel price per gallon is anticipated to be $2.60 in the second quarter of 2023.
Zacks Rank
SAVE currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Triton International Limited .
Copa Holdings, which presently flaunts a Zacks Rank #1 (Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and 2023, CPA’s earnings are expected to register 765.6% and 75.4% growth, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2 (Buy), is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. TRTN’s current ratio (a measure of liquidity) was 3.97 at the end of first-quarter 2023. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.