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Will Hurricanes Hamper JetBlue Airways' (JBLU) Q3 Earnings?
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JetBlue Airways Corporation (JBLU - Free Report) is scheduled to report third-quarter 2017 results on Oct 24, before the market opens.
Last quarter, the company delivered a positive earnings surprise of 14.3%. It also has an impressive earnings history, beating the Zacks Consensus Estimate in three of the last four quarters with an average beat of 4.3%.
However, things do not seem very favorable for the company this quarter.
Shares of the company have underperformed its industry in the last three months. The stock has lost around 13% compared with the industry’s 1.7% decline.
Let’s divulge into the factors rendering such a dismal outlook.
Factors at Play
JetBlue’s operations were disrupted by the devastating effects of consecutive natural calamities. The carrier expects its top line to be hurt to the tune of $44 million in the third quarter of 2017. Additionally, operating income is likely to be adversely impacted in the range of $30-$35 million. The bottom line too in the soon-to-be-reported quarter is expected to be hurt between 6 cents and 7 cents.
Notably, capacity is projected to expand approximately 3.7% in the third quarter. Due to weather-related setbacks, average seat miles (ASMs) have been trimmed to the tune of approximately 2.7 percentage points.
The destructive hurricanes have increased projection for unit costs, excluding fuel, to the tune of roughly 2.75 percentage points. The metric is expected to grow between 2.75% and 3.25% for the quarter. Fuel cost per gallon is projected to be $1.71.
However, revenue per available seat mile (RASM: a key measure of unit revenue) is estimated to inch up almost 0.9% in the quarter under review (the metric has been positively impacted to the tune of approximately 0.3 percentage points, thanks to the hurricanes).
Additionally, the carrier’s cost-control efforts are impressive. The company is looking to reduce its debt levels. Its long-term debt-to-equity (expressed as a percentage) ratio currently stands at 26.4. This compares favorably with its industry’s figure, which exceeds 100, as well as the S&P 500 index’s reading of 84.
Earnings Whispers
Our proven model does not conclusively show that JetBlue is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.
Zacks ESP: JetBlue has an Earnings ESP of -2.05% as the Most Accurate estimate is pegged marginally lower at 51 cents than the Zacks Consensus Estimate of 52 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: JetBlue carries a Zacks Rank #5 (Strong Sell).
We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
JetBlue Airways Corporation Price and EPS Surprise
Investors interested in the broader Transportation sector may consider SkyWest, Inc. (SKYW - Free Report) , Norfolk Southern Corporation (NSC - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) that have the right combination of elements to beat earnings in their next release.
SkyWest has an Earnings ESP of +1.03%. This Zacks #3 Ranked company will report third-quarter earnings numbers on Oct 25.
Norfolk Southern has an Earnings ESP of +0.67% and carries a Zacks Rank of 3 as well. The company will report third-quarter 2017 results on Oct 25.
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Will Hurricanes Hamper JetBlue Airways' (JBLU) Q3 Earnings?
JetBlue Airways Corporation (JBLU - Free Report) is scheduled to report third-quarter 2017 results on Oct 24, before the market opens.
Last quarter, the company delivered a positive earnings surprise of 14.3%. It also has an impressive earnings history, beating the Zacks Consensus Estimate in three of the last four quarters with an average beat of 4.3%.
However, things do not seem very favorable for the company this quarter.
Shares of the company have underperformed its industry in the last three months. The stock has lost around 13% compared with the industry’s 1.7% decline.
Let’s divulge into the factors rendering such a dismal outlook.
Factors at Play
JetBlue’s operations were disrupted by the devastating effects of consecutive natural calamities. The carrier expects its top line to be hurt to the tune of $44 million in the third quarter of 2017. Additionally, operating income is likely to be adversely impacted in the range of $30-$35 million. The bottom line too in the soon-to-be-reported quarter is expected to be hurt between 6 cents and 7 cents.
Notably, capacity is projected to expand approximately 3.7% in the third quarter. Due to weather-related setbacks, average seat miles (ASMs) have been trimmed to the tune of approximately 2.7 percentage points.
The destructive hurricanes have increased projection for unit costs, excluding fuel, to the tune of roughly 2.75 percentage points. The metric is expected to grow between 2.75% and 3.25% for the quarter. Fuel cost per gallon is projected to be $1.71.
However, revenue per available seat mile (RASM: a key measure of unit revenue) is estimated to inch up almost 0.9% in the quarter under review (the metric has been positively impacted to the tune of approximately 0.3 percentage points, thanks to the hurricanes).
Additionally, the carrier’s cost-control efforts are impressive. The company is looking to reduce its debt levels. Its long-term debt-to-equity (expressed as a percentage) ratio currently stands at 26.4. This compares favorably with its industry’s figure, which exceeds 100, as well as the S&P 500 index’s reading of 84.
Earnings Whispers
Our proven model does not conclusively show that JetBlue is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.
Zacks ESP: JetBlue has an Earnings ESP of -2.05% as the Most Accurate estimate is pegged marginally lower at 51 cents than the Zacks Consensus Estimate of 52 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: JetBlue carries a Zacks Rank #5 (Strong Sell).
We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
JetBlue Airways Corporation Price and EPS Surprise
JetBlue Airways Corporation Price and EPS Surprise | JetBlue Airways Corporation Quote
Stocks to Consider
Investors interested in the broader Transportation sector may consider SkyWest, Inc. (SKYW - Free Report) , Norfolk Southern Corporation (NSC - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) that have the right combination of elements to beat earnings in their next release.
SkyWest has an Earnings ESP of +1.03%. This Zacks #3 Ranked company will report third-quarter earnings numbers on Oct 25.
Norfolk Southern has an Earnings ESP of +0.67% and carries a Zacks Rank of 3 as well. The company will report third-quarter 2017 results on Oct 25.
Expeditors is also #3 Ranked with an Earnings ESP of +1.68%. The company will report third-quarter 2017 financial numbers on Nov 7. You can see the complete list of today’s Zacks #1 Rank stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>