Spirit Airlines (SAVE) Up 4% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Spirit Airlines, Inc. (NYSE:SAVE) . Shares have added about 4% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is SAVE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Fourth Quarter Earnings

Spirit Airlines’ fourth-quarter earnings (excluding $2.90 from non-recurring items) came in at 73 cents per share, outpacing the Zacks Consensus Estimate of 71 cents per share. However, quarterly earnings were down 5.2% year over year. Increased labor and fuel costs contributed to the year-over-year decline.

The carrier generated operating revenues of $667 million in the quarter. A 10.4% increase in flight volume contributed to the top line expanding 15.3% on a year-over-year basis.

In the reported quarter, total revenue per available seat mile improved 17.9% year over year. Load factor (% of seats filled by passengers) increased to 81.6% from 81.4% in the year-ago quarter. The upside was owing to traffic growth outpacing capacity expansion (17.6%) in the quarter. On the contrary, total revenue per available seat mile (TRASM: a key measure of unit revenue) declined 1.8% year over year due to the 2.2% reduction in operating yields. Adjusted cost per available seat mile (CASM), excluding special items and fuel, also decreased 4.4%.

Spirit Airlines expects TRASM to decline between 1% and 2.5% for the first quarter of 2018. Adjusted CASM, excluding fuel, is anticipated to decline between 5.5% and 6.5% for the first quarter of 2018. Fuel cost (economic) is projected to be $2.16 per gallon. Capacity is projected to increase approximately 21.5% in the same time period. The metric is anticipated to expand roughly 23% in 2018. Effective tax rate for the current year is projected at 24%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimate. There have been six revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 20.5% due to these changes.

Spirit Airlines, Inc. Price and Consensus

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

VGM Scores

At this time, SAVE has a poor Growth Score of F, a grade with the same score on the momentum front. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, SAVE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.