NEW YORK (TheStreet) -- Shares of Spirit Airlines (SAVE - Get Report) are higher by 7.12% to $41.99 in early afternoon trading on Tuesday, after the company announced the appointment of board member Robert Fornaro as its new President and CEO.
Effective immediately Fornaro, a "seasoned airline executive with 35 years of experience" will take over as President and CEO replacing Ben Baldanza.
"Following the tremendous growth and success of Spirit over the last 10 years, the board and I have concluded that this is the right time to implement an orderly succession plan," Baldanza said in a statement announcing the CEO change.
"Bob is the right choice to lead the company through its next phase of growth," he continued.
Spirit Airlines stock may also be getting a boost from the decline in oil prices today. Fuel is often an airline's largest expense.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate SPIRIT AIRLINES INC as a Hold with a ratings score of C+. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 10.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, SAVE has a quick ratio of 1.67, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has increased to $69.41 million or 11.66% when compared to the same quarter last year. Despite an increase in cash flow of 11.66%, SPIRIT AIRLINES INC is still growing at a significantly lower rate than the industry average of 133.46%.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Airlines industry average, but is greater than that of the S&P 500. The net income increased by 44.9% when compared to the same quarter one year prior, rising from $67.00 million to $97.11 million.
- SAVE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 46.18%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: SAVE