Spirit Airlines (SAVE) Up On Q3 Earnings & Revenues Beat

Shares of Spirit Airlines (NASDAQ:SAVE) have performed well of late. The stock has moved up 9.7% compared with its industry’s gain of 0.7% in a month.

The carrier performed impressively in the third quarter of 2017, despite disruptions caused by the recent hurricanes. Evidently, shares of this low-cost carrier have been on an uptrend, ever since its earnings release on Oct 26. This can be made out from the fact that the stock has gained 9.4% so far since its third-quarter outperformance.

Spirit Airlines’third-quarter earnings (excluding 7 cents from non-recurring items) came in at 94 cents per share, beating the Zacks Consensus Estimate of 90 cents. The bottom line however, plunged 24.2% on a year-over-year basis.

Spirit Airlines reported operating revenues of $687.2 million, marginally ahead of the Zacks Consensus Estimate $686.6 million. The top line improved 10.6% year over year owing to a 14% rise in non-ticket revenues.

In the reported quarter, total revenue per available seat mile decreased 6.3% due to low passenger yields from aggressive pricing action.Load factor (percentage of seats filled by passengers) decreased to 84% from 86% in the year-ago quarter. Load factor fell as traffic growth (15.2%) was outpaced by capacity expansion (18%) during the reported quarter.

Cost per available seat mile (CASM), excluding special items, and fuel slipped 1.1% on the back of lower maintenance and salaries, wages and benefits per available seat mile. Adjusted operating expense in the third quarter climbed 20.2% to $574.75 million.

The company’s board has recently authorized a share repurchase program worth up to $100 million in aggregate value. The date of expiration of the authorization is Oct 25, 2018.

Q417 Guidance

The company expects capacity (available seat miles) to expand 17.5% year over year in the fourth quarter. Total revenue per available seat mile (TRASM) is expected to decline in the range of 4-6% in the fourth quarter. While Adjusted CASM ex-fuel is estimated to be down 3-4% in the final quarter of 2017.

2018 Guidance

For full-year 2018, the carrier expects capacity to rise between 22% and 25% year over year. While Adjusted CASM ex-fuel is predicted to be down in the band of 3-5%.

Zacks Rank & Key Picks

Spirit Airlines currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the airline space are Deutsche Lufthansa (DE:LHAG) AG (OTC:DLAKY) , International Consolidated Airlines Group (LON:ICAG) SA (OTC:ICAGY) and Cathay Pacific Airways Ltd. (OTC:CPCAY) . While Deutsche Lufthansa and International Consolidated Airlines sport a Zacks Rank #1 (Strong Buy), Cathay Pacific Airways carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Deutsche Lufthansa, International Consolidated Airlines and Cathay Pacific Airways have risen 11.9%, 4.5% and 11.2% over a month.

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