Spirit Airlines Up 42% in a Year: What's Driving the Stock?

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Shares of Spirit Airlines, Inc. SAVE have fared well in a year's time. The stock has rallied 42.4%, against the industry 's decline of 2.6%.

Reasons for Robust Price Performance

The Miramar, FL-based airline company is aided by robust passenger revenues on the back of strong demand for air travel. Passenger revenues improved 21.7% in the first half of 2018. In fact, the company anticipates this metric to boost the top line in the upcoming quarters.

Moreover, Spirit Airlines' efforts to enhance efficiencies by reducing non-fuel unit costs look positive. Unit costs (excluding fuel and special items) dipped 8.2% in the first six months of the year. For 2018, the metric is projected to decline 3.5-4%.

Furthermore, the carrier's constant efforts to modernize fleet and expand operations are impressive. Spirit Airlines announced the purchase of 14 A319 aircraft during April 2017.  At the end of 2017, the fleet-size stood at 112. The fleet size is expected to expand further and reach 177 by the end of 2021. The company also maintains a young fleet with an average age of 5.1 years, which promotes fuel-efficient operations and reduces capital expenditures. To expand further, the company has recently decided to operate non-stop flights connecting Jacksonville International Airport to Chicago O'Hare International Airport and Detroit Metro Airport, which will be operational from Dec 20, 2018.

Additionally, Spirit Airlines' efforts to reward shareholders in the form of share buybacks also raise optimism on the stock. The company returned approximately $45 million to shareholders and bought back around 1.2 million shares during 2017. In line with this, the company's board authorized a share repurchase program worth $100 million in aggregate value, the date of expiration being Oct 25, 2018.  

Bullish Readings & Zacks Rank

Spirit Airlines has an impressive surprise history. It beat estimates in each of the trailing four quarters, the average being 2.9%.

The positivity revolving around the stock can be gauged from the Zacks Consensus Estimate being revised 6.4% upward in the past 60 days for current-quarter earnings.

Further, the company, carrying a Zacks Rank #2 (Buy), flaunts an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three scores.

Other Stocks to Consider

Investors interested in the broader Transportation Sector may consider SkyWest, Inc. SKYW , Matson, Inc. MATX and ArcBest Corporation ARCB , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Shares of SkyWest, Matson and ArcBest have gained 8.7%, 35.9% and 53.2% in the past six months, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: SKYW , SAVE , MATX , ARCB

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