Fly Away Buy: Spirit Airlines (NASDAQ:SAVE)


We look at Spirit Airlines, Inc. (NASDAQ:SAVE) [Trend Analysisa company in the airlines industry getting a lot of share market attention at present, to assess if it provides value for investors considering buying or selling it. Currently Spirit Airlines, Inc. is trading at $42.32 after moving up 1.88% in the previous day of trading.

SAVE is trading with a trailing 12 month P/E multiple of 55.29 and an estimated forward P/E multiple of 10.12. The stock has an estimated 5 year annual growth of 55.29% and a PEG multiple of 1.00.

Rather than the usual Price to Earnings (P/E) multiple method, we use a slightly different method to assess if Spirit Airlines, Inc. is potentially a value buy for investors, the PEG ratio (P/E to growth). This PEG multiple takes into account the expected long term growth in earnings of the company rather than merely the growth for one earnings period ahead as forward P/E does.

That is to say, P/E simply doesn’t account for the long term prospects of SAVE. As a rule of thumb, a stock with a PEG of between 0 and 1 is usually considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced. Based on the PEG ratio of SAVE being 1.00, we consider Spirit Airlines, Inc. to likely be underpriced.

This analysis means that value buyers who do not currently hold Spirit Airlines, Inc. (NASDAQ:SAVE) should consider buying and investors currently holding the stock should continue holding.

The mean analyst 12 month target price for Spirit Airlines, Inc. (NASDAQ:SAVE) is currently $55.29 or 30.65% above the current price. Additionally, the stock has been as high as $83.45 and as low as $32.73 in the last 52 weeks. Analysts are estimating that SAVE will report earnings per share of $0.82 next quarter.

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