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What's in Store for JetBlue (JBLU) This Earnings Season?

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JetBlue Airways Corporation (JBLU - Free Report) is scheduled to report third-quarter 2020 results on Oct 27, before market open.

Let’s take a look at the factors that are expected to have influenced the company’s third-quarter performance.

Low air travel demand due to COVID-19 is likely to have dented JetBlue’s third-quarter performance and hurt passenger revenues. The consensus estimate for passenger revenue per available seat mile suggests a decline 52% from the year-ago quarter’s reported number.  

To tackle low demand, the company resorted to capacity cuts. This measure was undertaken due to rise in government travel restrictions amid coronavirus concerns. The Zacks Consensus Estimate for capacity (measured in available seat miles) and traffic (measured in revenue passenger miles) reflects a 53.3% and 74.2% plunge from the year-ago quarter’s reported number, respectively. Since expected decline in traffic outweighs expected capacity contraction, load factor (% of seats filled by passengers) is likely to have declined in the to-be-reported quarter. Notably, Zacks Consensus Estimate for load factor in the September quarter is currently pegged at 47.3% compared with 86% reported in the third quarter of 2019.

With coronavirus affecting demand significantly, low fuel prices are expected to have partly offset the adversities and contributed to the bottom line in the third quarter. The consensus mark for average fuel cost per gallon indicates 40.7% decline from the year-ago qyarter’s reported figure.

Earnings Whispers

Our proven model does not predict a bottom line outperformance for JetBlue this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise, which is however, not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: JetBlue has an Earnings ESP of -1.63%. 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, currently.

Highlights of Q2

JetBlue incurred a loss (excluding 84 cents from non-recurring items) of $2.02 per share, wider than the Zacks Consensus Estimate of a loss of $1.86. Results were hurt by the coronavirus-induced weakness in air-travel demand.  Moreover, operating revenues of $215 million plunged 89.8% year over year and also lagged the Zacks Consensus Estimate of $220.1 million. This steep year-over-year fall was due to the 91.6% decline in passenger revenues, which accounted for bulk (79.1%) of the top line.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Westinghouse Air Brake Technologies Corporation (WAB - Free Report) , United Parcel Service Inc (UPS - Free Report) and Schneider National Inc (SNDR - Free Report) as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Westinghouse Air Brake Technologies Corporation has an Earnings ESP of +1.29% and and a Zacks Rank #3. The company will release third-quarter 2020 results on Oct 29.

UPS has an Earnings ESP of +4.52% and a Zacks Rank #2. The company will announce third-quarter results on Oct 28.

Schneider has an Earnings ESP of +1.82% and a Zacks Rank of 2. The company will release third-quarter earnings on Oct 29.

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