Get 40% Off
🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Spirit (SAVE) Q4 Earnings Meet Estimates, Q1 TRASM View Weak

Published 02/05/2019, 08:04 PM
Updated 07/09/2023, 06:31 AM
SAVE
-
SKYW
-
AFLYY
-
AZUL
-

Spirit Airlines, Inc.’s (NYSE:SAVE) fourth-quarter 2018 earnings per share (excluding 4 cents from non-recurring items) of $1.38 were in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved significantly year over year.

Following the earnings release, shares of the company declined more than 3% in after-hours trading on Feb 5 due to its soft first-quarter unit revenue outlook. The company expects total revenue per available seat mile (TRASM) to increase approximately 5% year over year during the first quarter of 2019. This is certainly a conservative outlook, given the airline’s fourth-quarter TRASM improvement of 11.4% on a year-over-year basis.

The carrier recorded revenues of $862.8 million, above the Zacks Consensus Estimate of $852.2 million. Also, the top line rose 29.4% year over year owing to 27% and 7.6% rise in non-ticket revenues and operating yields, respectively. Passenger revenues accounting for bulk (98.1%) of the top line jumped 30.1% year over year.

Spirit Airlines, Inc. Price, Consensus and EPS Surprise

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


Total revenue passenger miles (RPMs) registered an ascent of 20.4% in the reported quarter while available seat miles (ASMs) expanded 16.2% year over year. Consequently, the load factor (percentage of seats filled by passengers) climbed 290 basis points to 84.5% as traffic growth outweighed capacity expansion.

Total operating expenses escalated 26.4% to $726.73 million in the quarter under review, primarily due to 40.1% rise in salaries, wages and benefits. Average economic fuel cost per gallon rose 14.7% year over year to $2.26. Unit costs (excluding fuel and special items) increased 5.6%.

Q1 Outlook

The airline anticipates capacity growth of 16.5% year over year in the first quarter of 2019. Meanwhile, unit costs (excluding fuel and special items) are estimated to inch up 2-3% year over year in the period. Economic fuel cost is projected to be $2.06 per gallon compared with $2.15 reported in the year-ago quarter. Moreover, an effective tax rate of 22% is envisioned during the same time frame. This compares favorably with 24% effective tax rate reported in the first quarter of 2018.

2019 Outlook

For the full year, the company expects unit costs (excluding fuel and special items) to increase in the 1-2% range year over year. The previous guidance was a rise in the 0-1% band. This downside is due to higher aircraft rent and decrease in estimated average stage length. Capacity is anticipated to climb nearly 15% in the current year. Also, effective tax rate in the year is estimated to be 24%, commensurate with the reported figure in 2018. Additionally, capital expenditures are projected to be $210 million in 2019.

Zacks Rank & Other Key Picks

Spirit carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same space are SkyWest, Inc. (NASDAQ:SKYW) , Azul SA (NYSE:AZUL) and Air France-KLM SA (OTC:AFLYY) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SkyWest flaunts an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the trailing four reported quarters, the average being 16.9%. Meanwhile, shares of Azul and Air France-KLM have rallied more than 63% and 21%, respectively, in the past six months.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>



Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report

Air France-KLM SA (AFLYY): Free Stock Analysis Report

SkyWest, Inc. (SKYW): Free Stock Analysis Report

AZUL SA (AZUL): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.