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Why Is Spirit (SAVE) Down 13.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Spirit (SAVE - Free Report) . Shares have lost about 13.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Spirit due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Spirit Airlines Incurs Narrower Than Expected Loss in Q2
Spirit Airlines’ loss (excluding $2.39 from non-recurring items) of 34 cents per share was narrower than the Zacks Consensus Estimate of a loss of 83 cents and the year-ago loss of $3.59. In second-quarter 2019 (pre-coronavirus era), the carrier had reported earnings of $1.69 per share.
Operating revenues of $859.3 million skyrocketed 520.3% year over year and also surpassed the Zacks Consensus Estimate of $818.7 million. This massive year-over-year jump reflects improving air-travel demand as more and more people are flying following widespread vaccination. Revenues soared 86.3% sequentially. However, quarterly revenues declined 15.2% from the second-quarter 2019 actuals.
Passenger revenues, which accounted for bulk of the top line (98.5%), increased to $846.5 million in second-quarter 2021 from a mere $130 million a year ago when the impact of coronavirus on air-travel demand was much severe. Other revenues surged 66% year over year to $12.8 million. Passenger revenues were down 14.9% from the second-quarter 2019 actuals.
Other Details
All comparisons (in %) are presented below on a year-over-year basis.
Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) at Spirit skyrocketed 865% in the reported quarter. To cater to this increased demand, capacity (measured in available seat miles) expanded to 465.1%. Load factor increased 35 percentage points to 84.4% in the second quarter of 2021. Total operating revenue per available seat miles increased 9.4% to 8.4 cents in the reported quarter. Average yield fell 35.7% to 9.95 cents.
Adjusted operating expenses (excluding operating special items) escalated 80.8% to $869.2 million. The metric excluding fuel also increased 41.9% to $654.4 million. Average fuel cost per gallon in the reported quarter rose to $1.95 from $1.05 as oil prices shoot up. Fuel gallons consumed skyrocketed 480%, reflecting the usage of more planes to cater to buoyant air-travel demand. Adjusted cost per available seat miles (CASM) excluding fuel decreased 19.1% in the reported quarter, reflecting the expanded capacity.
The carrier ended the quarter with unrestricted cash, cash equivalents and short-term investments and liquidity available under the carrier’s revolving credit facility of $2.2 billion. Capital expenditures for the June quarter were $168 million, compared with $92 million at the end of the March quarter. The sequential increase was due to costs associated with pre-delivery deposits for future aircraft deliveries and the purchase of two A319 jets.
The carrier expects third-quarter 2021 capacity to ascend 10.6% from the levels achieved in third-quarter 2019. Fuel cost per gallon and the effective tax rate in the September quarter are anticipated to be $2.14 and 25%, respectively. Adjusted EBITDA margin for the same period is projected between 10% and 15%. Adjusted operating expenses are expected in the $1000-$1,010 million band. For the full year, total capital expenditures are expected to be $290 million. Capacity is expected to inch up 2.7% from the 2019 reading to cater to augmented demand. Spirit expects to end 2021, 2022 and 2023 with 173, 197 and 230 jets in its fleet, respectively.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -10242.85% due to these changes.
VGM Scores
At this time, Spirit has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Spirit has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Spirit (SAVE) Down 13.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Spirit (SAVE - Free Report) . Shares have lost about 13.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Spirit due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Spirit Airlines Incurs Narrower Than Expected Loss in Q2
Spirit Airlines’ loss (excluding $2.39 from non-recurring items) of 34 cents per share was narrower than the Zacks Consensus Estimate of a loss of 83 cents and the year-ago loss of $3.59. In second-quarter 2019 (pre-coronavirus era), the carrier had reported earnings of $1.69 per share.
Operating revenues of $859.3 million skyrocketed 520.3% year over year and also surpassed the Zacks Consensus Estimate of $818.7 million. This massive year-over-year jump reflects improving air-travel demand as more and more people are flying following widespread vaccination. Revenues soared 86.3% sequentially. However, quarterly revenues declined 15.2% from the second-quarter 2019 actuals.
Passenger revenues, which accounted for bulk of the top line (98.5%), increased to $846.5 million in second-quarter 2021 from a mere $130 million a year ago when the impact of coronavirus on air-travel demand was much severe. Other revenues surged 66% year over year to $12.8 million. Passenger revenues were down 14.9% from the second-quarter 2019 actuals.
Other Details
All comparisons (in %) are presented below on a year-over-year basis.
Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) at Spirit skyrocketed 865% in the reported quarter. To cater to this increased demand, capacity (measured in available seat miles) expanded to 465.1%. Load factor increased 35 percentage points to 84.4% in the second quarter of 2021. Total operating revenue per available seat miles increased 9.4% to 8.4 cents in the reported quarter. Average yield fell 35.7% to 9.95 cents.
Adjusted operating expenses (excluding operating special items) escalated 80.8% to $869.2 million. The metric excluding fuel also increased 41.9% to $654.4 million. Average fuel cost per gallon in the reported quarter rose to $1.95 from $1.05 as oil prices shoot up. Fuel gallons consumed skyrocketed 480%, reflecting the usage of more planes to cater to buoyant air-travel demand. Adjusted cost per available seat miles (CASM) excluding fuel decreased 19.1% in the reported quarter, reflecting the expanded capacity.
The carrier ended the quarter with unrestricted cash, cash equivalents and short-term investments and liquidity available under the carrier’s revolving credit facility of $2.2 billion. Capital expenditures for the June quarter were $168 million, compared with $92 million at the end of the March quarter. The sequential increase was due to costs associated with pre-delivery deposits for future aircraft deliveries and the purchase of two A319 jets.
The carrier expects third-quarter 2021 capacity to ascend 10.6% from the levels achieved in third-quarter 2019. Fuel cost per gallon and the effective tax rate in the September quarter are anticipated to be $2.14 and 25%, respectively. Adjusted EBITDA margin for the same period is projected between 10% and 15%. Adjusted operating expenses are expected in the $1000-$1,010 million band. For the full year, total capital expenditures are expected to be $290 million. Capacity is expected to inch up 2.7% from the 2019 reading to cater to augmented demand. Spirit expects to end 2021, 2022 and 2023 with 173, 197 and 230 jets in its fleet, respectively.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -10242.85% due to these changes.
VGM Scores
At this time, Spirit has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Spirit has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.