Financial Analysis: Spirit Airlines (SAVE) & Delta Air Lines (DAL)

Spirit Airlines (NASDAQ: SAVE) and Delta Air Lines (NYSE:DAL) are both mid-cap transportation companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.

Earnings & Valuation

This table compares Spirit Airlines and Delta Air Lines’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Spirit Airlines $2.49 billion 0.94 $509.32 million $3.45 9.77
Delta Air Lines $39.88 billion 0.88 $7.48 billion $5.03 9.59

Delta Air Lines has higher revenue and earnings than Spirit Airlines. Delta Air Lines is trading at a lower price-to-earnings ratio than Spirit Airlines, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

97.0% of Spirit Airlines shares are owned by institutional investors. Comparatively, 86.5% of Delta Air Lines shares are owned by institutional investors. 0.3% of Spirit Airlines shares are owned by insiders. Comparatively, 0.4% of Delta Air Lines shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Spirit Airlines and Delta Air Lines, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Spirit Airlines 0 6 5 0 2.45
Delta Air Lines 0 1 15 0 2.94

Spirit Airlines currently has a consensus price target of $50.33, indicating a potential upside of 49.40%. Delta Air Lines has a consensus price target of $62.31, indicating a potential upside of 29.14%. Given Spirit Airlines’ higher possible upside, research analysts clearly believe Spirit Airlines is more favorable than Delta Air Lines.

Dividends

Delta Air Lines pays an annual dividend of $1.22 per share and has a dividend yield of 2.5%. Spirit Airlines does not pay a dividend. Delta Air Lines pays out 24.3% of its earnings in the form of a dividend. Spirit Airlines has raised its dividend for 3 consecutive years.

Risk & Volatility

Spirit Airlines has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500. Comparatively, Delta Air Lines has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Profitability

This table compares Spirit Airlines and Delta Air Lines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Spirit Airlines 9.62% 17.96% 7.61%
Delta Air Lines 9.30% 28.33% 7.06%

Summary

Delta Air Lines beats Spirit Airlines on 9 of the 17 factors compared between the two stocks.

About Spirit Airlines

Spirit Airlines, Inc. is an airline company. The Company provides air transportation for passengers. As of December 31, 2016, its all-Airbus Fit Fleet operated over 420 daily flights to 59 destinations in the United States, Caribbean and Latin America. As of December 31, 2016, it had a fleet of 95 Airbus single-aisle aircraft, which are referred to as A320 family aircraft and include the A319, A320 and A321 models, which have common design and equipment but differ most notably in fuselage length, service range and seat capacity. As of December 31, 2016, its fleet consisted of 29 A319s, 45 A320ceos, five A320neos and 16 A321ceos. Its Bare Fares offerings are unbundled base fares that remove components included in the price of an airline ticket. It also offers Frill Control, which allows customers to pay only for the options they choose, such as bags, advance seat assignments and refreshments. As of December 31, 2016, its route network included 200 markets served by 59 airports.

About Delta Air Lines

Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo throughout the United States and across the world. The Company’s segments include Airline and Refinery. The Company’s route network is centered around a system of hub, international gateway and airports that the Company operates in Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los Angeles, Minneapolis-St. Paul, New York-LaGuardia, New York- John F Kennedy International Airport, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Each of these operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub or gateway to domestic and international cities and to other hubs or gateways. The Company’s route network includes its international joint ventures, its alliances with other foreign airlines, its membership in SkyTeam and agreements with multiple domestic regional carriers that operate as Delta Connection.

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