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Will Unit Revenues Aid Hawaiian Holdings (HA) Q1 Earnings?

By Zacks Investment ResearchStock MarketsApr 18, 2018 11:32PM ET
www.investing.com/analysis/will-unit-revenues-aid-hawaiian-holdings-ha-q1-earnings-200306959
Will Unit Revenues Aid Hawaiian Holdings (HA) Q1 Earnings?
By Zacks Investment Research   |  Apr 18, 2018 11:32PM ET
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Hawaiian Holdings, Inc. (NASDAQ:HA) is scheduled to release first-quarter 2018 earnings numbers on Apr 24, after the closing bell.

Last quarter, the company reported in-line earnings and lower-than-expected revenues. Moreover, the bottom line declined 14.1% due to high costs while the top line increased 8.5% on a year-over-year basis.

Let’s see, how things shape up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Hawaiian Holdings is likely to beat on earnings this quarter because it has the perfect combination of the following two key ingredients:

Zacks ESP: Hawaiian Holdings has an Earnings ESP of +1.27%. This is because the Most Accurate estimate is pegged at 83 cents per share, higher than the Zacks Consensus Estimate of 82 cents. A positive Zacks ESP is indicative of a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Hawaiian Holdings carries a Zacks Rank #3 (Hold). Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 when combined with a positive ESP have significantly higher chances of beating estimates.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.


Factors Likely at Play

The carrier’s strong demand for air travel is anticipated to boost passenger revenues in the first quarter. The Zacks Consensus Estimate for passenger revenues stands at $613 million, above $538 million reported in the prior-year quarter.

The company’s performance with respect to unit revenues is expected to aid the top line in the quarter to be reported. It projects operating revenue per available seat mile (RASM) to increase in the band of 3-5%. The Zacks Consensus Estimate for RASM is pegged at 13.95 cents, higher than 13.58 cents a year ago.

Additionally, the consensus mark for passenger unit revenues in the quarter stands at 12.96 cents, above 11.89 cents reported in the year-earlier period.

However, unit costs excluding fuel are projected to rise significantly in the first quarter of 2018, primarily due to higher labor costs. This is likely to hurt the company’s bottom line in turn. Cost per available seat mile (CASM) excluding fuel is anticipated to rise between 4% and 6% in the first quarter. The consensus estimate for unit costs is pegged at 9.79 cents, slightly higher than the year-ago figure of 9.64 cents.

High fuel costs are also expected to weigh on the bottom line. Further, fuel cost per gallon (economic) is estimated in the band of $1.90-$2 for the first quarter of 2018. The Zacks Consensus Estimate for first-quarter fuel price per gallon stands at $2, much above $1.68 reported a year ago.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also check out other stocks worth considering like American Airlines Group Inc. (NASDAQ:AAL) , JetBlue Airways Corporation (NASDAQ:JBLU) and Expeditors International of Washington, Inc. (NASDAQ:EXPD) as these possess the right combination of elements to deliver an earnings beat this time around.

American Airlines has an Earnings ESP of +3.35% and a Zacks Rank of 3. The company is scheduled to announce first-quarter results on Apr 26. You can see the complete list of today’s Zacks #1 Rank stocks here.

JetBlue Airways is a #3 Ranked player and has an Earnings ESP of +1.02%. The company is slated to release first-quarter numbers on Apr 24.

Expeditors is a Zacks #3 Ranked player and has an Earnings ESP of +2.09%. The company will report first-quarter earnings figures on May 8.

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Will Unit Revenues Aid Hawaiian Holdings (HA) Q1 Earnings?
 

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Will Unit Revenues Aid Hawaiian Holdings (HA) Q1 Earnings?

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