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Spirit Airlines (SAVE) Stock Nears 6-Month High: Here's Why

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Shares of Spirit Airlines (SAVE - Free Report) have been on an uptrend ever since it released a bullish fourth-quarter 2019 update on Jan 15. In fact, shares of this ultra low-cost carrier have gained 8.2% over the past two trading sessions, and are currently trading at $42.93, a near six-month high.

Spirit Airlines’ Revised Guidance

Spirit Airlines stated at an investor update that it now expects fourth-quarter total revenue per available seat mile (TRASM: a key measure of unit revenues) to have declined 3.6% from fourth-quarter 2018’s reported figure of 9.59 cents. This is an improvement from its outlook issued in October 2019, when the company estimated fourth-quarter 2019 TRASM decline in the 4.5-6.5% range.

The company also noted that fourth-quarter revenues are inclusive of $7.2 million, pertaining to the reclamation of over-remitted Federal Excise Tax. Excluding this amount, fourth-quarter 2019 TRASM are likely to have declined 4.3% year over year. Notably, the company expects to release detailed fourth-quarter results on Feb 5. The TRASM is a measure of sales relative to capacity for a carrier.

Additionally, the new guidance with respect to costs was favorable. The company expects fourth-quarter non-fuel unit costs (on an adjusted basis) to have increased 3.3% from the fourth-quarter 2018’s reported figure of 5.49 cents. Spirit Airlines had earlier predicted an increase between 3.5% and 4.5% for adjusted non-fuel unit costs.

Fuel cost per gallon is likely to have declined to $2.10 in the to-be-reported quarter compared to the year-ago figure of $2.26. The fourth-quarter 2019 effective tax rate (adjusted) is projected at 24%.

Zacks Rank & Key Picks

Spirit Airlines currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the Zacks Airline industry are Delta Air Lines (DAL - Free Report) , AZUL (AZUL - Free Report) and GOL Linhas (GOL - Free Report) , sporting a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Delta, AZUL and GOL Linhas gained more than 28%, 51% and 39%, respectively, in a year’s time.

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