Shares of Spirit Airlines (SAVE - Free Report) lost 8.42% in the last three months, underperforming the Zacks categorized Transportation- Airline industry’s gain of 3.03% in the same period.
In the fourth quarter of 2016, Spirit Airlines reported better-than-expected earnings. The carrier has an impressive track record with respect to earnings, having outshined the Zacks Consensus Estimate in each of the last four quarters. The average earnings beat is 4.7%. We expect the company to continue outperforming in terms of earnings in the coming quarters. We are encouraged by the carrier’s constant efforts to expand its operations. We are positive on the commencement of flights to Havana as well. Spirit Airlines’ efforts to modernize its fleet also raise optimism.
The company’s efforts to reward stockholders through share buybacks are impressive as well. During 2016, the company returned approximately $100 million to its shareholders. The carrier bought back approximately 2.3 million shares during the year. It maintains a young all-airbus fleet and is expected to increase its fleet size to 110 and 160 by the end of 2017 and 2021, respectively.
Even though, the company recently trimmed its forecast for the first quarter total revenue per available seat miles (TRASM: a key measure of unit revenues), the metric is expected to display year-over-year growth in the second quarter.
In view of the positives, we believe that Spirit Airlines stock should be retained by investors for now.
Zacks Rank & Key Picks
Spirit Airlines currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space are Gol Linhas Aereas Inteligentes (GOL - Free Report) , Deutsche Lufthansa and LATAM Airlines Group . Gol Linhas sport a Zacks Rank #1 (Strong Buy), while Deutsche Lufthansa and LATAM Airlines carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Gol Linhas, Deutsche Lufthansa and LATAM Airlines gained over 102%, 25% and 54%, respectively, on a year-to-date basis.
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