We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Rising Costs Dampen JetBlue's (JBLU) Earnings in Q4?
Read MoreHide Full Article
JetBlue Airways Corporation (JBLU - Free Report) is scheduled to report fourth-quarter 2017 results on Jan 25 before the market opens.
Last quarter, the company delivered a positive earnings surprise of 5.8%. Its earnings of 55 cents per share beat the Zacks Consensus Estimate by three cents. However, the bottom line declined 5.2% from the year-ago figure due to higher costs. The successive hurricanes also hurt results. Operating revenues increased 4.7% to $1,813 million, surpassing the Zacks Consensus Estimate of $1,809.3 million.
Let’s see what awaits the company in the fourth quarter.
Factors at Play
High costs are likely to hamper JetBlue's earnings in the fourth quarter similar to the third quarter. Fourth-quarter consolidated operating cost per available seat mile excluding fuel (CASM ex-fuel) is anticipated to be two percentage points, higher than the previous guidance of a 5-7% rise. This also includes an additional expense of around $23 million related to the $1,000 bonus for each crew member. The Zacks Consensus Estimate for fourth-quarter operating expense per available seat mile excluding fuel stands at 8.49 cents, higher than 8.07 cents reported in the third quarter.
Moreover, rise in fuel costs are likely to limit bottom-line growth in the to-be-reported quarter. JetBlue expects fuel cost per gallon for the fourth quarter between $1.89 and $1.92. The Zacks Consensus Estimate for average fuel cost per gallon in the same period is pegged at $1.88, above $1.69 reported in the preceding quarter.
However, JetBlue has recently raised its outlook for fourth-quarter revenues per available seat mile (RASM). The carrier now expects RASM to inch up approximately 1.8% in the quarter to be reported. Prior view was in the range of down 0.5% to up 1.5%.
Additionally, the carrier’s efforts to reduce debt levels may boost results in the quarter. Evidently, the company’s long-term debt-to-equity ratio (expressed as a percentage) of 24.9% compares favorably with its industry’s 86.3% and also the S&P 500 index’s measure of 82.9%.
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 -0.91% as the Most Accurate estimate is pegged marginally lower at 33 cents per share than the Zacks Consensus Estimate of 34 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 #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise. Hence, this combination leaves surprise prediction inconclusive.
We caution against the 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 Allegiant Travel Company (ALGT - Free Report) , SkyWest, Inc. (SKYW - Free Report) and Atlas Air Worldwide Holdings as these stocks possess the right combination of elements to beat on earnings in their next releases this time around.
Allegiant has an Earnings ESP of +1.09% and a Zacks Rank of 3. The company will release fourth-quarter earnings numbers on Jan 31.
Atlas Air Worldwide has an Earnings ESP of +2.16% and is a Zacks #3 Ranked player. The company is expected to announce fourth-quarter earnings figures on Feb 22.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Will Rising Costs Dampen JetBlue's (JBLU) Earnings in Q4?
JetBlue Airways Corporation (JBLU - Free Report) is scheduled to report fourth-quarter 2017 results on Jan 25 before the market opens.
Last quarter, the company delivered a positive earnings surprise of 5.8%. Its earnings of 55 cents per share beat the Zacks Consensus Estimate by three cents. However, the bottom line declined 5.2% from the year-ago figure due to higher costs. The successive hurricanes also hurt results. Operating revenues increased 4.7% to $1,813 million, surpassing the Zacks Consensus Estimate of $1,809.3 million.
Let’s see what awaits the company in the fourth quarter.
Factors at Play
High costs are likely to hamper JetBlue's earnings in the fourth quarter similar to the third quarter. Fourth-quarter consolidated operating cost per available seat mile excluding fuel (CASM ex-fuel) is anticipated to be two percentage points, higher than the previous guidance of a 5-7% rise. This also includes an additional expense of around $23 million related to the $1,000 bonus for each crew member. The Zacks Consensus Estimate for fourth-quarter operating expense per available seat mile excluding fuel stands at 8.49 cents, higher than 8.07 cents reported in the third quarter.
Moreover, rise in fuel costs are likely to limit bottom-line growth in the to-be-reported quarter. JetBlue expects fuel cost per gallon for the fourth quarter between $1.89 and $1.92. The Zacks Consensus Estimate for average fuel cost per gallon in the same period is pegged at $1.88, above $1.69 reported in the preceding quarter.
However, JetBlue has recently raised its outlook for fourth-quarter revenues per available seat mile (RASM). The carrier now expects RASM to inch up approximately 1.8% in the quarter to be reported. Prior view was in the range of down 0.5% to up 1.5%.
Additionally, the carrier’s efforts to reduce debt levels may boost results in the quarter. Evidently, the company’s long-term debt-to-equity ratio (expressed as a percentage) of 24.9% compares favorably with its industry’s 86.3% and also the S&P 500 index’s measure of 82.9%.
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 -0.91% as the Most Accurate estimate is pegged marginally lower at 33 cents per share than the Zacks Consensus Estimate of 34 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 #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise. Hence, this combination leaves surprise prediction inconclusive.
We caution against the 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 Allegiant Travel Company (ALGT - Free Report) , SkyWest, Inc. (SKYW - Free Report) and Atlas Air Worldwide Holdings as these stocks possess the right combination of elements to beat on earnings in their next releases this time around.
Allegiant has an Earnings ESP of +1.09% and a Zacks Rank of 3. The company will release fourth-quarter earnings numbers on Jan 31.
SkyWest has an Earnings ESP of +7.80% and a Zacks Rank of 1. The company is scheduled to report fourth-quarter results on Feb 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Atlas Air Worldwide has an Earnings ESP of +2.16% and is a Zacks #3 Ranked player. The company is expected to announce fourth-quarter earnings figures on Feb 22.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>