Spirit Airlines (SAVE, Financial) experienced a significant stock market movement today, with its price reaching $2.975 and a remarkable 22.93% increase. This surge follows recent positive developments surrounding the company, including potential merger discussions with Frontier Airlines and a refinancing extension for its 2025 bonds.
The stock's recent momentum is a reflection of strategic moves by Spirit Airlines to address its liquidity concerns. The extension until December 23 to refinance the 2025 bonds has brought a temporary relief to the airline, allowing it to focus on building up its liquidity, with a target of reaching $1 billion by the end of the year.
However, it is essential to consider Spirit's current financial standing. The company's Altman Z-Score of 0.29 places it in the distress zone, indicating a potential bankruptcy risk within the next two years. Additionally, the Beneish M-Score suggests possible financial manipulation, while the Piotroski F-Score of 1 points to poor business operation. Spirit Airlines also displays poor financial strength primarily due to its high debt levels.
From a valuation perspective, Spirit Airlines (SAVE, Financial) has a GF Value indicating it could be a potential value trap. The GF Value is estimated at $19.66, considerably higher than its current stock price, but investors are advised to think twice due to potential underlying risks.
For more information, you can visit the GF Value page for Spirit Airlines.
Overall, while the recent stock rally provides a glimmer of hope, investing in Spirit Airlines involves considerable risk due to its precarious financial position. Investors should carefully evaluate the potential outcomes of the ongoing merger discussions and the implications of the company's debt restructuring before making any investment decisions.
