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Spirit Airlines' Turbulent Flight: A 3Q16 Earnings Preview

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Spirit Airlines' Turbulent Flight: A 3Q16 Earnings Preview PART 1 OF 6

Why Spirit Airlines’ Stock Isn’t Flying So High Anymore

Spirit Airlines’ stock movement

Spirit Airlines (SAVE) has fallen ~5% in 3Q16. Southwest Airlines (LUV) and Allegiant Air (ALGT) have fallen 1% and 13%, respectively, in the same period.

All other airlines have been on a rising spree. American Airlines (AAL) has risen 29%, United Airlines (UAL) has risen 28%, Alaska Air Group (ALK) has risen 13%, Delta Air Lines (DAL) has risen 8%, and JetBlue Airways (JBLU) has risen 4%.

Why Spirit Airlines&#8217; Stock Isn&#8217;t Flying So High Anymore

Despite this fall in 3Q16, Spirit Airlines’ stock continues to be the best performing airline stock in 2016. The stock has risen almost 9% year-to-date (or YTD) as of October 18, 2016. On the day, it closed at $45.20, still 87% below its 2014 high of $84.47.

All other major airline stocks have fallen YTD in 2016. JBLU and DAL were the biggest losers, with both of their stocks falling ~23%. Alaska Air has fallen 11.5%, followed by Allegiant with a fall of 10.4% and American Airlines with a fall of 8%. United has fallen ~7% YTD, followed by Southwest Airlines (LUV) with a fall of ~4%.

The broader market tracked by the S&P 500 Index (SPY) has risen 3.8% YTD. As airline services are discretionary expenditures and airlines compete for the consumers’ money, it makes more sense to compare airlines’ performances with the performance of the consumer discretionary sector. The Consumer Discretionary SPDR ETF (XLY) is almost flat YTD.

Series overview

Spirit Airlines is expected to announce its 3Q16 financial results on October 25, 2016. In the following series, we’ll look at analysts’ estimates for the company’s 3Q16. We’ll also discuss what factors could lead to this expected performance and key indicators investors should watch.

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