Why Spirit Airlines (SAVE) Is Up Today

Tickers in this article: SAVE

NEW YORK (TheStreet) -- Spirit Airlines was gaining 8.8% to $51.85 Wednesday after the airline announced fourth-quarter earnings that beat analyst estimates.

For its fourth quarter Spirit Airlines reported earnings of 56 cents a share. Analysts expected earnings of 50 cents a share for the quarter. Revenue rose 27.9% to $420 million, which is in line with analyst estimates of $430.98 million.

Total revenue per available seat mile was 11.43 cents in the fourth quarter of 2013, up 3% from the year-ago period. The airline said the year-over-year increase is due to strong demand and growth in capacity. The increase is also partly due to the negative impact of Hurricane Sandy in the fourth quarter of 2012.

Must read: Spirit Airlines Beats Estimates as Earnings Rise 110%

TheStreet Ratings team rates SPIRIT AIRLINES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate SPIRIT AIRLINES INC (SAVE) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SAVE's revenue growth has slightly outpaced the industry average of 32.4%. Since the same quarter one year prior, revenues rose by 33.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • SAVE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, SAVE has a quick ratio of 1.71, which demonstrates the ability of the company to cover short-term liquidity needs.
  • SPIRIT AIRLINES INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SPIRIT AIRLINES INC increased its bottom line by earning $1.50 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($2.37 versus $1.50).
  • Net operating cash flow has significantly increased by 557.11% to $39.37 million when compared to the same quarter last year. In addition, SPIRIT AIRLINES INC has also vastly surpassed the industry average cash flow growth rate of 54.13%.
  • Powered by its strong earnings growth of 95.34% and other important driving factors, this stock has surged by 135.85% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: SAVE Ratings Report