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Bear of the Day: Hawaiian Holdings (HA)

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Airline stocks were flying high when oil prices were down and traffic was up. What’s happened since then has been a different story. Major headwinds are beginning to pick up and its putting pressure on profits. The airline industry is in the Bottom 6% of our Zacks Industry Rank while several airline stocks are Zacks Rank #5 (Strong Sell) stocks.

One of those stocks is today’s Bear of the Day, Hawaiian Holdings (HA - Free Report) . Hawaiian Holdings, Inc., through its subsidiary, Hawaiian Airlines, Inc., engages in the scheduled air transportation of passengers and cargo. The company offers daily services on North America routes between the State of Hawai'i and Los Angeles, Oakland, Sacramento, San Diego, San Francisco, and San Jose, California; Las Vegas, Nevada; Phoenix, Arizona; Portland, Oregon; and Seattle, Washington. It also provides daily service on Neighbor Island routes among the six islands of the State of Hawai'i; and international routes between the State of Hawai'i and Sydney, Australia, as well as Tokyo and Osaka, Japan. As of December 31, 2016, the company’s fleet consisted of 20 Boeing 717-200 aircraft for the Neighbor Island routes; 8 Boeing 767-300 aircraft; and 23 Airbus A330-200 aircraft for the North America, International, and charter routes, as well as owns 3 ATR42 aircraft. 

The reason Hawaiian has the rating is does is a flurry of negative earnings estimate revisions coming in over the last week. Three analysts have dropped their estimates for the current quarter, current year and next year. The most dramatic move was seen in next year’s consensus estimate where the number has come down from $5.01 to $4.37. Compare that $4.37 to this year’s $5.49 and you can see the sharp contraction in earnings that’s leading to a bleak outlook for Hawaiian.

The negative move in estimates has mirrored the negative move in the stock. After trading near $60 into June shares have come under pressure, dipping below both the 50 and 200-day moving averages. Monday’s close at $38.95 was only $2.75 off the 52-week lows.

Investors looking for other airline stocks should consider doing some research on Zacks Rank #1 (Strong Buy) Deutsche Lufthansa and Zacks Rank #2 (Buy) AZUL SA (AZUL - Free Report) .

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