Can an airline have both value and growth? Hawaiian Holdings Inc. (HA - Snapshot Report), the parent of Hawaiian Airlines, is expected to see high double digit earnings growth in 2012. Yet this Zacks #1 Rank (Strong Buy) is also dirt cheap, with a forward P/E of only 4.6.
Hawaiian Holdings operates Hawaiian Airlines, the longest serving airline in Hawai'i. Operating for 83 years, it offers non-stop service from 11 mainland cities along with international service to Japan, South Korea, the Philippines, Australia, American Samoa and Tahiti.
It also flies about 170 daily flights between the Hawaiian Islands transporting passengers, cargo and mail.
The company recently announced new daily non-stop service between Honolulu and New York City. It will be the only carrier offering year-round flights between the two cities.
May Traffic Rises
On June 7, Hawaiian Airlines released its May traffic statistics. Passengers transported was up 6% year over year to 782,093.
Year to date the number of passengers transported was up 6.2% to 3.7 million.
Hawaiian Beat By 300% In Q1
On Apr 24, Hawaiian Holdings reported first quarter results and blew by the Zacks Consensus by 9 cents. Earnings per share were 6 cents compared to the consensus of a loss of 3 cents. It lost 6 cents per share in the year ago quarter so it was quite a turnaround.
Passenger revenue per available seat mile (PRASM) rose 6.5% to 12.45 cents.
The first quarter is normally a seasonal weak quarter. But demand for the long haul services stayed strong and counteracted higher fuel costs.
Fuel costs rose 28.3% to $140.3 million compared to the first quarter a year ago. It represented 33.2% of operating expenses.
The company also added a 6th A330 and started flying the Fukuoka-Honolulu service during the quarter.
It has plenty of cash on hand. As of Mar 31, 2012, it had cash and cash equivalents of $376 million and $5.2 million in restricted cash.
It also has $56.6 million available under its revolving credit facility.
The 2012 Zacks Consensus Estimate Jumped
Within the last 30 days, the analysts have gotten even more bullish about Hawaiian Airlines for 2012.
3 estimates have moved higher, and 1 lower, in that time period. That has pushed the Zacks Consensus Estimates up to $1.30 from $1.26.
That is huge earnings growth of 53.4% as the company only made 85 cents in 2011.
Hawaiian Holdings Is Super Cheap
Shares have been on a roller coaster the last 2 years and are now well off their 2011 highs.
The stock has tremendous value.
In addition to a P/E under 5, which is also well under its peers which average 8.4, Hawaiian has a P/B of 1.3. A P/B ratio under 3.0 usually means a company is a value.
The company also has a really low price-to-sales ratio of just 0.2. A P/S ratio under 1.0 can indicate a company is undervalued and Hawaiian's is WAY under that.
Many people don't like to invest in airlines but Hawaiian is using its strong niche as a key player in the popular Hawaiian Islands to grow earnings.