A month has gone by since the last earnings report for JetBlue Airways (
JBLU Quick Quote JBLU - Free Report) . Shares have added about 25.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is JetBlue due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
JetBlue Posts Q4 Loss, Suffers Weak Load Factor
JetBlue incurred a loss (excluding 19 cents from non-recurring items) of $1.53 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $1.72. Results were hurt by the coronavirus-induced weakness in air-travel demand. However, sentiments were bullish in the year-ago period when the company delivered earnings of 56 cents per share owing to strong air-travel demand.
Moreover, operating revenues of $661 million plunged 67.4% year over year due to the 68.9% decrease in passenger revenues, which accounted for bulk (91.7%) of the top line. Revenues from other sources declined 33.8% to $55 million. The top line, however, surpassed the Zacks Consensus Estimate of $617.8 million. Other Details
Revenue per available seat mile (RASM: a key measure of unit revenues) in the reported quarter dropped 38.3% to 7.80 cents. Passenger revenue per available seat mile (PRASM) fell 41% to 7.15 cents. Average fare at JetBlue during the quarter dipped 2.9% to $180.54. Yield per passenger mile dropped 7.8% year over year to 13.63 cents.
Capacity, measured in available seat miles, contracted 47.3% year over year. Traffic, measured in revenue passenger miles, plunged 66.2% due to softness in air-travel demand. Load factor (percentage of seats filled by passengers) slumped to 52.4% from 81.9% a year ago as traffic decline was more than the capacity reduction in the reported quarter. In the fourth quarter, total operating expenses (on a reported basis) decreased 38.2% year over year, mainly owing to a 70.5% fall in aircraft fuel and related taxes. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 53.2% to 102 million. Average fuel cost per gallon (including fuel taxes) declined 36.9% year over year to $1.31. JetBlue’s operating expenses per available seat mile (CASM) rose 17.2% to 13.16 cents due to capacity cuts. Excluding fuel, the metric escalated 48.2% to 12.31 cents. JetBlue exited the fourth quarter with cash and cash equivalents of $1,918 million compared with $959 million at the end of 2019. Total debt at the end of the reported quarter was $4,863 million compared with $2,334 million at 2019 end. The carrier exited the final quarter of 2020 with approximately $3.1 billion in unrestricted cash, cash equivalents and short-term investments. Moreover, cash burn came in at $6.7 million per day, on average, during the fourth quarter. The average daily cash burn was toward the lower end of the $6-$8 million range predicted in early December. Q1 Outlook
Revenues for the first quarter of 2021 are expected to decline in the 65-70% range from the first-quarter 2019 actuals. Capacity is anticipated to contract at least 40% in the March quarter from the figure reported in the first quarter of 2019. Operating expenses are expected to be roughly 25% down from the recorded first-quarter 2019 levels. Average fuel cost per gallon in the March quarter is estimated to be $1.61. EBITDA is expected in the range of a negative $525-$625 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -32.57% due to these changes.
At this time, JetBlue has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise JetBlue has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.