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Zack’s Bull of the Day: Spirit Airlines


Spirit Airlines, Inc. (NASDAQ:SAVE) is flying high on lower crude prices and its discount model. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by the double digits again in 2015.

Spirit is a discount airline that gained fame by unbundling its services and offering customers the option about what they want to purchase- whether that is bags, seat assignment and refreshments.

Spirit makes nearly 40% of its revenue from non-ticket product purchases.

Its all-Airbus fleet operates more than 325 daily flights to 57 destinations in the United States, Latin America and the Caribbean.

Perfect Earnings Surprise Record

On Feb 10, Spirit reported its fourth quarter results and once again beat the Zacks Consensus Estimate. Earnings were $0.80 compared to the Zacks Consensus of $0.77.

It has surprised every quarter since its 2011 IPO.

Revenue rose 13% to $474.5 million boosted by an increase in flight volume.

It took delivery of 7 new A320 aircraft in the quarter bringing the total number of aircraft in its fleet to 65.

The airline has also announced 25 new nonstop routes that will start this year, including new routes from Cleveland. It also recently added 3 new destinations from Los Angeles.

The analysts are bullish on Spirit in 2015.

Earnings are expected to jump another 60.8% in 2015 and then continue growing 11.3% in 2016.

Shares Still Cheap

Shares of Spirit have been on quite the run in the last 2 years as oil prices fell and consumer demand for travel strengthened.

Yet shares are still attractively valued.

Spirit trades with a forward P/E of 14.8, which is under the average of the S&P 500 of 18.

With its high growth rate, it also has an attractive PEG ratio of just 0.5. A PEG under 1.0 usually indicates a company has both growth and value. A rare combination.

The airlines are still a top ranked industry, coming in at 19 out of 265 Zacks Ranked Industries, which is a top 7% rank.

For investors looking to play the transports, and cheap crude, Spirit is one to keep on your short list.

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