We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Investors Should Avoid Spirit Airlines (SAVE) Now
Read MoreHide Full Article
Spirit Airlines’ (SAVE - Free Report) financial stability is challenged by high operating expenses and low liquidity. Elevated labor costs exacerbate the strain on the company's bottom line. Also, low liquidity impedes its ability to meet obligations, in turn making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 510.3% downward over the past 90 days. For the current year, the consensus mark for earnings has moved 18% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: SAVE currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: Spirit Airlines has declined 82.7% in the past year against its industry’s 7.3% growth.
Image Source: Zacks Investment Research
Bleak Earnings Surprise History: SAVE has a discouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate only twice in the trailing four quarters and missing in the remaining two quarters. The average miss is 3.86%.
Other Headwinds: The northward movement in operating expenses is adversely impacting Spirit Airlines’bottom line. This surge in operating expenses is primarily driven by the increase in labor costs.
In the first quarter of 2024,Labor costs, comprising salaries and benefits (accounting for 29.3% of the total operating expenses), rose by 10.9% year over year to $431.5 million in the first quarter of 2024.
Spirit Airlines exited the first quarter of 2024 with a current ratio (a measure of liquidity) of 0.97 at the end of the first quarter of 2024, raising liquidity concerns. A current ratio of less than 1 indicates that the company does not have enough cash to meet its short-term obligations.
Moreover, Spirit Airlines’high capex raises concerns as ahigh capex value in times of revenue weakness, as is the case with SAVE, is not desirable.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 128%. Shares of SkyWest have jumped 98.2% in the past year.
KEX holds a Zacks Rank #2 (Buy) at present andhas an expected earnings growth rate of 42.5% for the current year.
The company has an encouraging track record concerning the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 10.3%. Shares of Kirby have climbed 59.6% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Here's Why Investors Should Avoid Spirit Airlines (SAVE) Now
Spirit Airlines’ (SAVE - Free Report) financial stability is challenged by high operating expenses and low liquidity. Elevated labor costs exacerbate the strain on the company's bottom line. Also, low liquidity impedes its ability to meet obligations, in turn making it an unattractive choice for investors’ portfolios.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 510.3% downward over the past 90 days. For the current year, the consensus mark for earnings has moved 18% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: SAVE currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: Spirit Airlines has declined 82.7% in the past year against its industry’s 7.3% growth.
Image Source: Zacks Investment Research
Bleak Earnings Surprise History: SAVE has a discouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate only twice in the trailing four quarters and missing in the remaining two quarters. The average miss is 3.86%.
Other Headwinds: The northward movement in operating expenses is adversely impacting Spirit Airlines’bottom line. This surge in operating expenses is primarily driven by the increase in labor costs.
In the first quarter of 2024,Labor costs, comprising salaries and benefits (accounting for 29.3% of the total operating expenses), rose by 10.9% year over year to $431.5 million in the first quarter of 2024.
Spirit Airlines exited the first quarter of 2024 with a current ratio (a measure of liquidity) of 0.97 at the end of the first quarter of 2024, raising liquidity concerns. A current ratio of less than 1 indicates that the company does not have enough cash to meet its short-term obligations.
Moreover, Spirit Airlines’high capex raises concerns as ahigh capex value in times of revenue weakness, as is the case with SAVE, is not desirable.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include SkyWest (SKYW - Free Report) and Kirby Corporation (KEX - Free Report) .
SkyWest currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. SKYW has an expected earnings growth rate of 787% for the current year.
The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 128%. Shares of SkyWest have jumped 98.2% in the past year.
KEX holds a Zacks Rank #2 (Buy) at present andhas an expected earnings growth rate of 42.5% for the current year.
The company has an encouraging track record concerning the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 10.3%. Shares of Kirby have climbed 59.6% in the past year.