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Spirit (SAVE) Down 7.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Spirit (SAVE - Free Report) . Shares have lost about 7.6% 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' Q2 Earnings Beat, Rise Y/Y
Spirit Airlines’ earnings per share (excluding 2 cents from non-recurring items) of $1.69 surpassed the Zacks Consensus Estimate by 5 cents. The bottom line also improved 52.3% on a year-over-year basis despite higher costs.
Operating revenues of $1,013 million edged past the Zacks Consensus Estimate of $1012.2 million. The top line also improved 18.9% year over year on the back of an 18.4% rise in flight volume and favorable passenger yields, and load factor (% of seats filled by passengers). Passenger revenues, accounting for bulk (98.2%) of the top line, improved 18.9% year over year.
While adjusted operating expenses surged 14.8%, adjusted non-fuel unit costs increased 4.6% in the quarter under review. A severe storm during the Easter holiday weekend resulted in the cancellation of multiple flights, pushing up costs higher. The company incurred roughly $6 million expenses due to passenger re-accommodation and disrupted crew costs.
Total revenue passenger miles (RPMs) registered a 15% improvement in the reported quarter and available seat miles (ASMs) expanded 13.2% year over year. As a result, the load factor climbed 130 basis points to 85% as traffic growth outweighed capacity expansion. Average economic fuel cost per gallon in the reported quarter declined 6.9% year over year to $2.16.
Outlook
Spirit Airlines anticipates capacity growth of approximately 13% year over year for the third quarter of 2019. The company expects third-quarter revenue per available seat mile (TRASM) growth in the -1 to +1% band.
The carrier expects third-quarter cost per available seat mile (CASM), excluding fuel (non-fuel unit costs), to increase in the 7-8% range on a year-over-year basis. Factors like the construction work at the Ft. Lauderdale airport, lower completion factor and expenses associated with flight disruptions contributed to this bearish view.
Economic fuel cost is projected to be $2.13 per gallon. Moreover, an effective tax rate of 24% is envisioned for the third quarter. In fourth-quarter 2019, non-fuel unit costs are expected to increase between 3.5% and 4.5%.
For 2019, the company expects non-fuel unit costs to increase between 4.5% and 5% (earlier view had called for an increase in the 2-3% range). Capacity is anticipated to climb 14.5% during the current year. Effective tax rate in the year is estimated to be 24%. Additionally, current-year total capital expenditures are projected to be $504 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -19.77% due to these changes.
VGM Scores
At this time, Spirit has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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. Notably, Spirit has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Spirit (SAVE) Down 7.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Spirit (SAVE - Free Report) . Shares have lost about 7.6% 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' Q2 Earnings Beat, Rise Y/Y
Spirit Airlines’ earnings per share (excluding 2 cents from non-recurring items) of $1.69 surpassed the Zacks Consensus Estimate by 5 cents. The bottom line also improved 52.3% on a year-over-year basis despite higher costs.
Operating revenues of $1,013 million edged past the Zacks Consensus Estimate of $1012.2 million. The top line also improved 18.9% year over year on the back of an 18.4% rise in flight volume and favorable passenger yields, and load factor (% of seats filled by passengers). Passenger revenues, accounting for bulk (98.2%) of the top line, improved 18.9% year over year.
While adjusted operating expenses surged 14.8%, adjusted non-fuel unit costs increased 4.6% in the quarter under review. A severe storm during the Easter holiday weekend resulted in the cancellation of multiple flights, pushing up costs higher. The company incurred roughly $6 million expenses due to passenger re-accommodation and disrupted crew costs.
Total revenue passenger miles (RPMs) registered a 15% improvement in the reported quarter and available seat miles (ASMs) expanded 13.2% year over year. As a result, the load factor climbed 130 basis points to 85% as traffic growth outweighed capacity expansion. Average economic fuel cost per gallon in the reported quarter declined 6.9% year over year to $2.16.
Outlook
Spirit Airlines anticipates capacity growth of approximately 13% year over year for the third quarter of 2019. The company expects third-quarter revenue per available seat mile (TRASM) growth in the -1 to +1% band.
The carrier expects third-quarter cost per available seat mile (CASM), excluding fuel (non-fuel unit costs), to increase in the 7-8% range on a year-over-year basis. Factors like the construction work at the Ft. Lauderdale airport, lower completion factor and expenses associated with flight disruptions contributed to this bearish view.
Economic fuel cost is projected to be $2.13 per gallon. Moreover, an effective tax rate of 24% is envisioned for the third quarter. In fourth-quarter 2019, non-fuel unit costs are expected to increase between 3.5% and 4.5%.
For 2019, the company expects non-fuel unit costs to increase between 4.5% and 5% (earlier view had called for an increase in the 2-3% range). Capacity is anticipated to climb 14.5% during the current year. Effective tax rate in the year is estimated to be 24%. Additionally, current-year total capital expenditures are projected to be $504 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -19.77% due to these changes.
VGM Scores
At this time, Spirit has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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. Notably, Spirit has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.