Trade-Ideas LLC identified Spirit Airlines ( SAVE) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Spirit Airlines as such a stock due to the following factors:

  • SAVE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $71.6 million.
  • SAVE has traded 650,054 shares today.
  • SAVE is trading at 2.43 times the normal volume for the stock at this time of day.
  • SAVE crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on SAVE:

Spirit Airlines, Inc. provides low-fare airline services. SAVE has a PE ratio of 11. Currently there are 7 analysts that rate Spirit Airlines a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Spirit Airlines has been 1.3 million shares per day over the past 30 days. Spirit Airlines has a market cap of $3.5 billion and is part of the services sector and transportation industry. The stock has a beta of 0.65 and a short float of 6% with 2.19 days to cover. Shares are up 19% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Spirit Airlines as a buy. 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, expanding profit margins, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 9.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.54, 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 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 37.26% is the gross profit margin for SPIRIT AIRLINES INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.31% is above that of the industry average.
  • Net operating cash flow has significantly increased by 96.80% to $106.70 million when compared to the same quarter last year. In addition, SPIRIT AIRLINES INC has also vastly surpassed the industry average cash flow growth rate of -32.44%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to other companies in the Airlines industry and the overall market on the basis of return on equity, SPIRIT AIRLINES INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.

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