As low-priced gas prices are showing a better result than expected for Delta Airlines, hopes are rising for Spirit Airlines as well, which reports earnings today.
Shares of Spirit Airlines Incorporated (NASDAQ:SAVE ) on closing Friday were approximately US$77.44, at 2.46% year to date, besting Dow Jones Industrial Average and S&P 500 that have shown flat trade.
Spirit shares have shown a flat trade in the past three months, giving a golden opportunity for investors to buy, The shares that were active 68% in a year never trade cheap. And with Delta benefiting from cheap gas, which lowered its fuel costs, Spirit stock is likely to take off Tuesday from this same result. And investors on the sidelines don’t want to get left behind.
Last year, however, the company grew its earnings at 60%. It is expected that the earnings would grow at more than 32% this year, but also Spirit is expected to raise its earnings 36% annual rate in the upcoming five years. That’s more than twice the 16% projected annual growth rate of United Continental and 15 percentage points higher than Southwest Airlines.
The company hasdeveloped a different and disruptive low cost business outlook that would pay off handsomely to shareholders, as Spirit does provide higher profit margins. The term has been called “Frill Control” by the company, because passengers are “never stuck paying for extras they didn’t ask for.”
For this reason, the company generates 40% of its revenues from add-ons i.e. carry-on-luggage and checked bags.
The prediction of analysts are going ahead at 78 cents/share in earnings revenue of US$447 million for the last Q in December, highlighting annual growth of 38% and 13.7%. For its 12 months period, the earnings are hopefully surging at 32% annually, when the revenue is raising at 17% to US$1.9 billion.