Back to top

Spirit Airlines (SAVE) Q1 Earnings: A Beat in the Cards?

Read MoreHide Full Article

Florida-based Spirit Airlines (SAVE - Free Report) is scheduled to report first-quarter 2017 results on Apr 28, before the opening bell.

Last quarter, the company posted a positive earnings surprise of 4.05%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in each of the previous four quarters, with an average beat of 4.70%.

In the last one month, Spirit Airlines gained 13.53% outperforming the Zacks categorized Transportation-Airline industry’s gain of 5.15%.

Why a Likely Positive Surprise?

Our proven model shows that Spirit Airlines is likely to beat the Zacks Consensus Estimate this quarter as it has the perfect combination of two key ingredients.

Zacks ESP: The Earnings ESP for Spirit Airlines is +2.08% as the Most Accurate estimate is pegged at 49 cents while the Zacks Consensus Estimate is 48 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Spirit Airlines carries a Zacks Rank #3 (Hold). Please note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Factors at Play

Spirit Airlines reported an impressive 11.6% year-over-year increase in traffic in Mar 2017. We are optimistic about the carrier’s relentless efforts to expand operations. The carrier's focus on modernizing its fleet also buoys hope. The company’s initiatives to reward stockholders through share buybacks are impressive as well.

Spirit Airlines expects total revenue per available seat mile (TRASM: a key measure of unit revenues) to decline approximately 4.3% in the first quarter. The sharp decline in the metric is expected due to the shift in Easter holiday.

Despite the bearish TRASM view, an earnings beat in the first quarter might not be too difficult for Spirit Airlines. This is because of the conservative nature of the Zacks Consensus Estimate for the first quarter of 2017. The measure stands at 48 cents, which is much lower than the comparable figure of 97 cents in the first quarter of 2016.

Spirit Airlines, Inc. Price and EPS Surprise

 

Spirit Airlines, Inc. Price and EPS Surprise | Spirit Airlines, Inc. Quote

Stocks to Consider

Investors interested in the broader transportation sector may also consider Air Lease Corporation (AL - Free Report) , American Airlines Group (AAL - Free Report) and Fly Leasing Limited (FLY - Free Report) as our model shows it possesses the right combination of elements to post an earnings beat in its next release.

Air Lease Corporation has an Earnings ESP of +1.16% and a Zacks Rank #3. The company will report first-quarter results on May 4.

American Airlines has an Earnings ESP of +1.75% and a Zacks Rank #3. The company will report first-quarter results on Apr 27.

Fly Leasing has an Earnings ESP of +11.43% a Zacks Rank #3. The company will report first-quarter results on May 11. You can see the complete list of today’s Zacks #1 Rank stocks here.

Looking for Ideas with Even Greater Upside?

Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.                                                                           

Click here for a peek at this private information >>



More from Zacks Analyst Blog

You May Like