It’s been a tumultuous week for Spirit Airlines (SAVE) and its investors, as the stock plummeted more than 60% after a judge blocked a deal for the budget airliner to be acquired by competitor JetBlue Airways. It’s been rumored that the company could be headed toward bankruptcy.
But, SAVE is turning things around to end the week on a positive note – up more than 26% today in Friday’s trading session after the company announced it would come in at the high end of its Q4 forecast.
Revenue should come in around $1.3 billion as Spirit saw solid bookings to close the year out. Profitability will get a nice improvement too. Previously, the company forecasted negative adjusted as high as 19%. Now, the margins are expected to fall between 12% to 13%. Decreasing fuel costs and other expenses are contributing to this improvement.
While Spirit and JetBlue intend to appeal the judge’s decision to block their acquisition, Spirit is already looking for other ways to stay alive – as it may have to refinance $1 billion in debt going into 2025. This could include selling or leasing some of its aircraft, a move that the company has relied on in the past for liquidity.
Part of Spirit’s problems over the past year or so has been an engine problem keeping planes grounded. This has caused costs to pile up, but it appears relief could be coming soon from the manufacturer behind the malfunction, Pratt & Whitney. Spirit believes that the compensation will be a substantial source of liquidity for a few years.
We’ll know more about the future of Spirit Airlines in the coming weeks leading into February 8’s earnings call. In the meantime, what should investors do with SAVE? We’ve taken a look through the VectorVest stock analysis software and found 3 things you need to see…
Despite Fair Upside Potential, SAVE Has Poor Safety and Very Poor Timing
VectorVest saves you time and stress while empowering you to win more trades with less work. The proprietary stock rating system gives you all the insights you need to make confident decisions in 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each rating sits on its own scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy. To make things even easier, though, you’re given a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. As for SAVE, here’s what you need to know:
- Fair Upside Potential: The RV rating is a comparison of a stock’s long-term price appreciation potential (forecasted 3 years out) to AAA corporate bondrates and risk. It offers much better insight than a simple comparison of price to value alone. SAVE has a fair RV rating of 1.07. It’s undervalued right now with a current value of $10.44.
- Poor Safety: The RS rating is a risk indicator that’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. SAVE has a poor RS rating of 0.75 right now.
- Very Poor Timing: As you can see from the stock’s performance, SAVE has very poor timing right now, even after today’s turnaround. The RT rating of 0.15 reflects this. It’s based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 0.72 is poor for SAVE, and VectorVest considers this stock a SELL today. Learn more through a free stock analysis and transform the way you trade for the better!
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VectorVest advocates buying safe, undervalued stocks, rising in price. SAVE fell 62% earlier this week before recovering 22% today. The company won’t be acquired by JetBlue for now, and there are many challenges ahead. But, there is optimism about upcoming earnings, sources of liquidity, and more. The stock has fair upside potential, but it’s being held back by poor safety and very poor timing.
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