Will Harvey Hamper Spirit Airlines' (SAVE) Q3 Earnings?

Spirit Airlines (NASDAQ:SAVE) is scheduled to report third-quarter 2017 results on Oct 26, before the opening bell.

Last quarter, the company delivered a positive earnings surprise of 2.7%. Also, the company has an impressive earnings history of surpassing the Zacks Consensus Estimate in each of the preceding four quarters with an average beat of 4.4%.

However, due to recent disruptions caused by the natural calamities, shares of the company have lost 29.9% in the last three months, underperforming the industry’s 0.5% decline over the same period.

Let’s see how things shape up for this earnings.

Factors at Play

Hurricanes Harvey, Irma and Maria have greatly impacted Spirit. The storms forced the airline to cancel more than 1,650 flights in the third quarter. The company anticipates natural calamities and the pilot dispute to affect revenues in third quarter to the tune of $40 million and operating margin to the tune of approximately 450 basis points.

The company estimates third-quarter economic fuel cost per gallon to be $1.75, much higher than the $1.66 reported in the previous quarter.

The company anticipates roughly 6.5% year-over-year decline in TRASM (total revenue per available seat mile) in its third quarter. The carrier expects total available seat miles in third quarter to rise 18% year over year.

The carrier expects adjusted cost per available seat miles in the third quarter between flat to down 1% due to fewer available seat miles and costs incurred in the process of recovery from the natural calamities.

However, the carrier’s expansion and fleet modernization initiatives raise optimism. The company’s efforts to reward stockholders through share buybacks are also impressive.

Earnings Whispers

Per our proven model, a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. However, that is not the case as highlighted below.

Zacks ESP: Spirit Airlines has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 86 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Spirit Airlines carries a Zacks Rank #5 (Strong Sell). We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Spirit Airlines, Inc. Price and EPS Surprise

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

Stocks to Consider

Investors interested in the broader Transportation sector may consider Triton International Limited (NYSE:TRTN) , Norfolk Southern Corporation (NYSE:NSC) and Expeditors International of Washington, Inc. (NASDAQ:EXPD) as these stocks have the right combination of elements to beat earnings in their next releases.

Triton International has an Earnings ESP of +2.04% and carries a Zacks Rank of 3. The company is expected to report third-quarter earnings numbers on Nov 9. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Norfolk Southern has an Earnings ESP of +0.59%. This Zacks #3 Ranked company will report third-quarter 2017 results on Oct 25.

Expeditors is also #3 Ranked with an Earnings ESP of +1.68%. The company will report third-quarter 2017 financial numbers on Nov 7.

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