Measuring Spirit Airlines, Inc.'s (NYSE:SAVE) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess SAVE's recent performance announced on 30 September 2019 and compare these figures to its historical trend and industry movements.
Were SAVE's earnings stronger than its past performances and the industry?
SAVE's trailing twelve-month earnings (from 30 September 2019) of US$346m has jumped 11% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.5%, indicating the rate at which SAVE is growing has accelerated. What's enabled this growth? Let's see whether it is solely a result of an industry uplift, or if Spirit Airlines has seen some company-specific growth.
In terms of returns from investment, Spirit Airlines has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. Furthermore, its return on assets (ROA) of 6.2% is below the US Airlines industry of 6.6%, indicating Spirit Airlines's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Spirit Airlines’s debt level, has declined over the past 3 years from 20% to 9.6%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 1.4% to 99% over the past 5 years.
What does this mean?
Spirit Airlines's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Spirit Airlines to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SAVE’s future growth? Take a look at our free research report of analyst consensus for SAVE’s outlook.
- Financial Health: Are SAVE’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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