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Low-cost carrier Spirit Airlines (SAVE – Snapshot Report) is set to unveil its fourth-quarter and full-year 2015 financial results before the opening bell on Feb 9.

In the third quarter of 2015, the company posted a positive 5.47% earnings surprise. Let’s see how things are shaping up for this announcement.

Factors at Play

Last month, Spirit Airlines provided an encouraging forecast with respect to operating margin for the final quarter of 2015. The Miramar, FL-based discount carrier expects operating margin for the quarter to be approximately 22.5%. The fresh outlook represents a marked improvement from the previous projection of 17.5%. The carrier cited better-than-expected revenues and lower costs in the quarter as factors driving its improved guidance.

Moreover, results at Spirit Airlines, as with other carriers, will be benefitted by low fuel costs. The carrier expects fuel price in the fourth quarter to be $1.59 per gallon representing a significant decline from the year-ago quarter. Capacity at Spirit Airlines is projected to grow 30.5% in the fourth quarter.

However, the competitive pricing environment presents a challenge for the low-cost carrier. We expect a commentary on the pricing issue on the fourth quarter conference call. A more detailed outlook for 2016 than the one provided in the Jan 19 investor update is also expected on the conference call.

Earnings Whispers

Our proven model does not conclusively show that Spirit Airlines is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Spirit Airlines has an earnings ESP of 0.00%. This is because the Most Accurate estimate is in line with the Zacks Consensus Estimate of 98 cents.

Zacks Rank: Spirit Airlines has a Zacks Rank #2 which increases the predictive power of ESP. However, a 0.00% ESP makes a positive surprise prediction problematic.

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