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Is a Beat in Store for Spirit Airlines (SAVE) Q1 Earnings?

Zacks Equity Research
Updated

Spirit Airlines, Inc. SAVE is slated to release first-quarter 2018 results on Apr 26, before he market opens.

In fourth-quarter 2017, the company delivered a positive earnings surprise of 2.82%. Moreover, it has an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the preceding four quarters with an average beat of 3.5%.

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

What the Zacks Model Unveils

Our proven model shows that Spirit Airlines is likely to beat on earnings this quarter as it comprises the perfect combination of the following two key ingredients:

Zacks ESP: Spirit Airlines has an Earnings ESP of +2.46% as the Most Accurate estimate of 44 cents is pegged above the Zacks Consensus Estimate of 43 cents. A positive ESP indicates a likely earnings surprise. 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 #3 (Hold), which further increases the predictive power of ESP. Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have significantly higher chances of beating estimates.
 
Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Spirit Airlines, Inc. Price and EPS Surprise

 

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

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What is Driving This Better-Than-Expected Earnings?

Lower non-fuel unit costs owing to better operational performance are expected to boost the bottom line in the first quarter. Notably, the company anticipates non-fuel unit costs to decline approximately 5% in the soon-to-be reported quarter.
 
Additionally, the new tax law is a huge positive and is anticipated to boost profitability in the quarter. The enormous savings from the reduced corporate tax rate is likely to aid in earnings growth.

However, high fuel costs might hurt the impending results. Fuel cost (economic) is projected at $2.15 per gallon in the yet-to-be-reported quarter, much higher than $1.97, reported in the final quarter of 2017. The Zacks Consensus Estimate for first-quarter average fuel cost per gallon stands at $2.17.

Moreover, disappointing unit revenues might limit top-line growth in the quarter. The company expects total revenue per available seat mile (TRASM) to decline approximately 2.4% in the to-be-reported quarterly performance.

 

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider Union Pacific Corporation UNP, SkyWest, Inc. SKYW and Expeditors International of Washington, Inc. EXPD as these stocks too possess the right combination of elements to deliver an earnings beat this time around.

Union Pacific has an Earnings ESP of +0.04% and a Zacks Rank of 3. The company is scheduled to report first-quarter earnings on Apr 26.

SkyWest has an Earnings ESP of +2.99% and a Zacks Rank #2. The company will report first-quarter results on Apr 26. You can see the complete list of today’s Zacks #1 Rank stocks here.

Expeditors is a #2 Ranked player and has an Earnings ESP of +2.09%. The company will report first-quarter earnings figures on May 8.

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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
 
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
 
Union Pacific Corporation (UNP) : Free Stock Analysis Report
 
Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research