What Wall Street Predicts for Spirit Airlines in Q3
For the third quarter of 2017, Spirit Airlines’ (SAVE) revenues are estimated to grow 13.5% year-over-year or YoY to $704.5 million. This should be followed by 11.3% YoY growth for the fourth quarter to $643.9 billion.
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This growth should lead to full-year 2017 revenue growth of 13.4% YoY to $2.6 billion, which would be higher than the company’s 2016 revenue growth of 8.5% YoY and its 2015 revenue growth of 10.8% YoY. This growth would mark a trend reversal after revenue growth fell for three consecutive years.
For the third quarter of 2017, EBITDA (earnings before interest, tax, depreciation, and amortization) is expected to grow 9.7% YoY to $238.7 million. For the fourth quarter, EBITDA is expected to grow 11.2% YoY to $191.2 million. For the third quarter, growth is mainly expected to be driven by revenue growth. EBITDA margins are expected to decline to 33.8% from 35.0% in 3Q16. For 4Q17, EBITDA margins are expected to remain flat at 29.7%. Combined with revenue growth, the airline should be able to record higher EBITDA growth.
This growth should lead to full-year 2017 EBITDA growth of 0.9% YoY to $795.5 million with an EBITDA margin of 30.2%—lower than the 33.9% margin recorded in 2016. The 2017 decline in EBITDA is a result of poor performance in the first half of 2017.
For the third quarter, earnings are expected to fall 26.1% YoY to $0.92 per share due to a 15.6% YoY decline in net profit. Similarly, for 4Q17, earnings are expected to fall 32.9% YoY to $0.52 per share due to a 13.7% YoY decline in net profit.
For full-year 2017, earnings per share are expected to fall 25.4% YoY to $3.1 per share due to a 23.4% decline in net profits. The total number of shares outstanding for 2017 is expected to fall 1.2% to 69.6 million shares, a result of SAVE’s share buyback program.
Investors can gain exposure to Spirit Airlines by investing in the SPDR S&P Transportation ETF (XTN), which invests 2.6% of its portfolio in SAVE. It also invests 2.9% in Allegiant Travel (ALGT), 2.8% in American Airlines (AAL), and 2.7% in Southwest Airlines (LUV).