Spirit Airlines (NASDAQ: SAVE) and Virgin America (NASDAQ:VA) are both transportation companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Profitability

This table compares Spirit Airlines and Virgin America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Spirit Airlines 8.55% 15.86% 6.62%
Virgin America 11.64% 22.78% 10.96%

Institutional and Insider Ownership

65.6% of Virgin America shares are owned by institutional investors. 0.3% of Spirit Airlines shares are owned by insiders. Comparatively, 31.2% of Virgin America shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Spirit Airlines and Virgin America, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Spirit Airlines 1 8 4 0 2.23
Virgin America 1 0 0 0 1.00

Spirit Airlines presently has a consensus target price of $41.75, indicating a potential downside of 1.07%. Virgin America has a consensus target price of $57.00, indicating a potential upside of 0.00%. Given Virgin America’s higher possible upside, analysts plainly believe Virgin America is more favorable than Spirit Airlines.

Earnings & Valuation

This table compares Spirit Airlines and Virgin America’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Spirit Airlines $2.32 billion 1.26 $264.87 million $3.15 13.40
Virgin America N/A N/A N/A $6.68 8.53

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

Summary

Virgin America beats Spirit Airlines on 7 of the 10 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 Virgin America

Virgin America Inc. is an airline that provides scheduled air travel in the United States and Mexico. The Company operates in air transportation service segment. The Company operates from Los Angeles and San Francisco with a presence at Dallas Love Field (DAL) to other destinations in North America. The Company provides service to over 20 airports in the United States and Mexico with a fleet of over 60 narrow-body aircraft. It offers three levels of service: First Class, Main Cabin Select and Main Cabin. The Company’s First Class level of service includes eight-seat cabin with an inflight teammate to provide service. Its Main Cabin Select includes approximately 40 inches of pitch for leg room. The Company’s Main Cabin includes approximately 30 inches of pitch and individual Red inflight entertainment system at every seatback. The Company maintains a guest loyalty program called the Elevate frequent flyer program.

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