The airlines are flying high and so are their stocks.
Spirit Airlines, Inc.
) recently posted record third quarter results as revenue jumped
double digits over a year ago. This Zacks Rank #1 (Strong Buy) is
expected to see double digit earnings growth in both 2013 and 2014.
Spirit Airlines operates a low-cost airlines based on ultra-low
base fares which allows customers to buy the extras they value. The
company has a $9 Fare Club program that costs $59.95 per year but
gives customers access to special low fares and deals on baggage
Spirit operates about 250 flights to 50 destinations in the U.S.,
Caribbean and Latin America. It is one of the few airlines offering
service from the United States to the expanding markets of Panama
Big Beat in the Third Quarter
On Oct 30, Spirit reported its third quarter results and blew by
the Zacks Consensus by $0.10. Earnings were $0.79 compared to the
Zacks Consensus of $0.69. It was the fourth earnings beat in a row.
Revenue jumped 33.4% to $456.6 million. Total revenue per available
seat mile ("RASM") was 12.55 cents, up 8.9% compared to the year
ago quarter. The gain was due to higher load factors and higher
average passenger yields.
Adjusted pre-tax margin rose to 20.3%, the highest quarterly
adjusted pre-tax margin in the company's history.
Spirit is expected to have strong double digit earnings growth of
57% in 2013 and another 20.2% in 2014.
In the third quarter, Spirit added one new A320 aircraft, bringing
its total fleet to 51 aircraft. It recently started several new
routes including Dallas/Fort Worth to Phoenix Sky Harbor, Phoenix
Sky Harbor to Chicago and Minneapolis/St. Paul to Tampa.
Shares At 2-Year Highs
After another solid earnings beat, shares jumped to new highs.
Even though shares are hitting new highs, the stock isn't super
expensive. It trades with a forward P/E of 18.9 but given its
strong earnings growth it has a PEG ratio of just 0.7. A PEG under
1.0 usually indicates that a company is undervalued.
For investors looking for a way to play the low-cost airlines,
Spirit is one to keep on the short list.
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SPIRIT AIRLINES (SAVE): Free Stock Analysis
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