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How Damaging Has Coronavirus Been for Spirit (SAVE) Q1 Earnings?
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Spirit Airlines, Inc. (SAVE - Free Report) is expected to report first-quarter 2020 results on May 6.
Waning air travel demand due to the coronavirus crisis has crippled the carrier’s operations. Evidently, the Zacks Consensus Estimate for first-quarter earnings has been revised significantly downward over the last 60 days.
Let’s delve deeper to unearth factors that are expected to have influenced the airline’s first-quarter performance.
Spirit’s passenger revenues, contributing approximately 98% to the top line, are expected to have been affected in the quarter by capacity cuts undertook on account of declining demand and government travel restrictions amid coronavirus concerns. Notably, the Zacks Consensus Estimate for passenger revenues indicates a 1.1% drop from the previous quarter’s reported figure.
The carrier was already witnessing some weakness on the total unit revenue (total operating revenue per available seat mile, TRASM: a key measure of unit revenues) front due to low operating yields. The situation worsened following the virus outbreak in the first quarter. Significant decline in yields since late-February is anticipated to get reflected on TRASM. In fact, the carrier saw significant pressure on fares and impact on load factor late-February onward. The Zacks Consensus Estimate for first-quarter TRASM suggests a 7.3% decline from the fourth-quarter 2019 reported figure.
With fuel expenses comprising a major chunk of airline expenses, low fuel prices are expected to reflect on the bottom line, thereby partly mitigating the adversities. The consensus mark for average economic fuel cost per gallon indicates a 4.8% decline from the fourth-quarter 2019 reported number.
The proven Zacks model does not conclusively predict an earnings beat for Spirit this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: Spirit has an Earnings ESP of -22.91% as the Most Accurate Estimate is pegged at a loss of 76 cents, wider than the Zacks Consensus Estimate of a loss of 62 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Spirit carries a Zacks Rank #3.
Highlights of Q4 Earnings
In the last reported quarter, the company delivered a positive earnings surprise of 4.2%. However, the bottom line declined 10.1% on a year-over-year basis due to increased operating costs. Meanwhile, operating revenues edged past the Zacks Consensus Estimate and also improved 12.4 % year over year on the back of an 18.6% expansion in flight volume.
Stocks to Consider
Investors interested in the airline space may consider Allegiant Travel Company (ALGT - Free Report) , Hawaiian Holdings (HA - Free Report) and Alaska Air Group (ALK - Free Report) as these stocks possess the right combination of elements to beat on earnings this reporting cycle.
Allegiant has an Earnings ESP of +14.63% and a Zacks Rank of 3.
Hawaiian Holdings has an Earnings ESP of +15.21% and a Zacks Rank #3. The company will announce first-quarter earnings on May 5.
Alaska Air Group has an Earnings ESP of +11.06% and is a #3 Ranked player. The company will also release first-quarter numbers on May 5.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Shutterstock
How Damaging Has Coronavirus Been for Spirit (SAVE) Q1 Earnings?
Spirit Airlines, Inc. (SAVE - Free Report) is expected to report first-quarter 2020 results on May 6.
Waning air travel demand due to the coronavirus crisis has crippled the carrier’s operations. Evidently, the Zacks Consensus Estimate for first-quarter earnings has been revised significantly downward over the last 60 days.
Let’s delve deeper to unearth factors that are expected to have influenced the airline’s first-quarter performance.
Spirit’s passenger revenues, contributing approximately 98% to the top line, are expected to have been affected in the quarter by capacity cuts undertook on account of declining demand and government travel restrictions amid coronavirus concerns. Notably, the Zacks Consensus Estimate for passenger revenues indicates a 1.1% drop from the previous quarter’s reported figure.
The carrier was already witnessing some weakness on the total unit revenue (total operating revenue per available seat mile, TRASM: a key measure of unit revenues) front due to low operating yields. The situation worsened following the virus outbreak in the first quarter. Significant decline in yields since late-February is anticipated to get reflected on TRASM. In fact, the carrier saw significant pressure on fares and impact on load factor late-February onward. The Zacks Consensus Estimate for first-quarter TRASM suggests a 7.3% decline from the fourth-quarter 2019 reported figure.
With fuel expenses comprising a major chunk of airline expenses, low fuel prices are expected to reflect on the bottom line, thereby partly mitigating the adversities. The consensus mark for average economic fuel cost per gallon indicates a 4.8% decline from the fourth-quarter 2019 reported number.
Spirit Airlines, Inc. Price and EPS Surprise
Spirit Airlines, Inc. price-eps-surprise | Spirit Airlines, Inc. Quote
Earnings Whispers
The proven Zacks model does not conclusively predict an earnings beat for Spirit this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: Spirit has an Earnings ESP of -22.91% as the Most Accurate Estimate is pegged at a loss of 76 cents, wider than the Zacks Consensus Estimate of a loss of 62 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Spirit carries a Zacks Rank #3.
Highlights of Q4 Earnings
In the last reported quarter, the company delivered a positive earnings surprise of 4.2%. However, the bottom line declined 10.1% on a year-over-year basis due to increased operating costs. Meanwhile, operating revenues edged past the Zacks Consensus Estimate and also improved 12.4 % year over year on the back of an 18.6% expansion in flight volume.
Stocks to Consider
Investors interested in the airline space may consider Allegiant Travel Company (ALGT - Free Report) , Hawaiian Holdings (HA - Free Report) and Alaska Air Group (ALK - Free Report) as these stocks possess the right combination of elements to beat on earnings this reporting cycle.
Allegiant has an Earnings ESP of +14.63% and a Zacks Rank of 3.
Hawaiian Holdings has an Earnings ESP of +15.21% and a Zacks Rank #3. The company will announce first-quarter earnings on May 5.
Alaska Air Group has an Earnings ESP of +11.06% and is a #3 Ranked player. The company will also release first-quarter numbers on May 5.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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