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Spirit (SAVE) Up 2.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Spirit (SAVE). Shares have added about 2.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Spirit 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.

Spirit Airlines Incurs Loss in Q2

Spirit Airlines suffered a loss of $3.59 per share (excluding $1.78 from non-recurring items) for the second quarter, wider than the Zacks Consensus Estimate of a loss of $2.70. However, in the year-ago quarter, the company delivered earnings of $1.69. Meanwhile, operating revenues of $138.5 million surpassed the Zacks Consensus Estimate of $118.5 million. The top line, however, plunged 86.3% year over year due to the coronavirus-led air-travel demand disaster.

Passenger revenues, which contributed 94.5% to the top line, plummeted 86.8% year over year. Additionally, revenues from other sources tanked 58.4%. With the traffic decline of 90.2% exceeding the capacity contraction of 83.2%, load factor declined to 49.4% from 85% a year ago. Average fuel cost per gallon in the reported quarter fell 51.4% year over year to $1.05. Also, CASM excluding operating special items and fuel (non-fuel unit costs), escalated more than 100% in the reported quarter due to reduced capacity. Spirit ended the quarter with unrestricted cash, cash equivalents and short-term investments worth $1.2 billion.

The carrier estimates average daily cash burn between $3 and $4 million for the September quarter. For the third quarter 2020, capacity is estimated to be down 32% year over year. Total capital expenditures for the current year are estimated to be roughly $560 million

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -157.73% due to these changes.

VGM Scores

At this time, Spirit 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 B on the value side, putting it in the top 40% 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Spirit has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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