Is The Market Pricing Spirit Airlines Fairly?
Spirit Airlines (NYSE: SAVE) has had a rather decent earnings history in 2017, beating the consensus estimate through every quarter, while recording a near 14% jump in revenues year-over-year. That said, since the beginning of 2017, the company’s stock price has fallen a considerable 30%. Given our calculations, this price seems fair. According to our estimates, we expect the price to come in around $47. (Current market price is $45.)
We have created an interactive dashboard analysis to estimate Spirit Airlines’ valuation based on its expected revenues for FY 2018. Click on the link to modify the figures to arrive at your own price estimate.
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Our estimate of $47 is based on a few expectations:
- Spirit will deliver $2.97 billion in revenues in FY 2018.
- The P/S multiple in FY 2018 will be around 1.07, which is slightly less than 1.17 in FY 2017.
- The company’s average share count in FY 2018 will be around 67 million.
Spirit’s revenue comes from two main sources: passenger revenue and non-ticket revenue.
In order to estimate the revenues for each of the divisions, we broke down the historical data to their core revenue drivers. This enabled us to forecast each of the drivers, thereby making our estimates as accurate as possible.
Passenger Revenue:
Non-ticket Revenue:
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