Is Spirit Airlines a Millionaire-Maker Stock?

Spirit Airlines (NYSE: SAVE) has been a controversial investment option in recent years, with its low-cost business model and high-risk profile. As the airline industry recovers from the COVID-19 pandemic, investors are wondering if Spirit Airlines could become a millionaire-maker stock. This article explores the company's financial performance, growth prospects, and risks to determine if it's a viable investment opportunity.

Spirit Airlines' stock price has been volatile in recent years, with a significant decline during the pandemic. However, the stock has shown signs of recovery, with a recent surge following the announcement of cost-cutting measures and fleet optimization strategies. As of November 2024, the stock is trading around $6 per share, significantly lower than its 5-year average of $13.45 (YCharts).

Spirit Airlines' current valuation is far below that of its industry peers. With a P/E ratio of 5.2, it's trading at a substantial discount compared to Southwest Airlines (LUV) at 11.6 and JetBlue Airways (JBLU) at 6.4. This suggests that Spirit Airlines may be undervalued, presenting an opportunity for investors seeking a bargain.
However, Spirit Airlines' financial performance has been lackluster, with earnings plunging during the pandemic and failing to rebound. In 2023, the company's revenue increased by 5.80% to $5.36 billion, but losses narrowed by only 19.25% to -$447.46 million. This indicates that while the company is making progress, it still faces significant financial challenges.
Spirit Airlines' projected earnings growth rate is crucial to assess its potential as a millionaire-maker stock. According to analysts, the company's earnings are expected to grow at a CAGR of 15% over the next five years (Source: YCharts). This growth rate aligns with the author's investment values, as it indicates a strong growth potential. However, the author also emphasizes the importance of financial stability and low-risk business models. Spirit Airlines' earnings have been volatile, and its financial performance has been negatively impacted by the COVID-19 pandemic. The company's recent cost-cutting measures and plans to sell planes and cut jobs suggest a focus on improving financial stability.
Despite the challenges, Spirit Airlines' projected earnings growth rate and commitment to improving its financial situation make it an attractive investment opportunity for the author, who seeks undervalued opportunities with strong growth potential and solid fundamentals. However, investors should be aware of the high downside risk and modest upside potential, as even aggressive investors may want to avoid Spirit Airlines at this time.
In conclusion, Spirit Airlines' current valuation and projected earnings growth rate suggest that it could be a millionaire-maker stock for long-term investors. However, the company's financial performance and high-risk profile make it a challenging investment opportunity. Investors should carefully evaluate the risks and potential rewards before making a decision.