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JetBlue (JBLU) Down 9.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for JetBlue Airways (JBLU - Free Report) . Shares have lost about 9.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is JetBlue due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

JetBlue Posts Loss in Q2

JetBlue Airways incurred a second-quarter 2021 loss (excluding 11 cents from non-recurring items) of 47 cents per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of 11 cents. Higher operating expenses hurt the bottom line.

Quarterly loss per share was narrower than the year-ago loss of 64 cents. Operating revenues of $2,445 million surged 63.1% year over year but fell short of the Zacks Consensus Estimate of $2,468.3 million. This massive year-over-year jump reflects improving air-travel demand.

Passenger revenues, accounting for the bulk of the top line (94.2%), increased to $2,302 million in second-quarter 2022 from a mere $1,388 million a year ago when the impact of coronavirus on air-travel demand was much severe. Other revenues surged 29.6% to $143 million.Other Details

Other Details

All comparisons are presented on a year-over-year basis. Revenue per available seat mile (RASM: a key measure of unit revenues) in the reported quarter improved 35.7% to 14.90 cents. Passenger revenue per available seat mile (PRASM) surged 34.9% to 14.03 cents owing to better air-travel demand. Average fare at JetBlue during the June quarter increased 26.6% to $221.38. Yield per passenger mile shot up 28.5% year over year to 16.48 cents.

Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) improved 29.3% in the reported quarter. To cater to this increased demand, capacity (measured in available seat miles) expanded 20.2% to 16,405 million. Consolidated load factor (percentage of seats filled by passengers) increased 5.9 percentage points to 85.1% in the second quarter of 2022 as traffic growth outpaced capacity expansion.

In the second quarter, total operating expenses (on a reported basis) escalated 89.2% to $2,558 million, mainly due to a 170.7% rise in aircraft fuel expenses and related taxes. Average fuel price per gallon (including related taxes) climbed to $4.24 from $1.91 a year ago as oil prices move north.

JetBlue’s operating expenses per available seat mile (CASM) increased 57.4% to 15.59 cents. Excluding fuel, the metric declined 3.6% to 9.68 cents.

JetBlue, currently carrying a Zacks Rank #4 (Sell), exited the second quarter of 2022 with cash and cash equivalents of $1,611 million compared with $2,018 million at the end of 2021. Total debt at the end of the reported quarter was $3,822 million compared with $4,006 million at 2021 end. During the quarter, JBLU paid off regularly scheduled debt and finance lease obligations worth $106 million.

Outlook

While providing guidance for third-quarter 2022, management stated that all comparisons are made with respect to the third quarter of 2019. Capacity is anticipated to be flat or decrease up to 3% from third-quarter 2019 actuals. CASM excluding fuel and special items is predicted to rise 15-17%.

RASM is forecast to increase in the 19-23% range. Average fuel cost per gallon in the September quarter is estimated to be $3.68. Capital expenditures in the third quarter are anticipated to be roughly $350 million. Tax rate is anticipated to be 37%. Number of shares are expected to be roughly 325 million.

For 2022, capacity is expected to be flat or increase up to 3% from the 2019 levels. CASM, excluding fuel and special items, is predicted to rise 11-14% from the 2019 actuals. Capital expenditures for 2022 are anticipated to be roughly $1 billion. Current-year interest expenses are forecast in the $160-$170 million band. Tax rate is anticipated to be 15%. Number of shares are expected to be roughly 324 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 13.98% due to these changes.

VGM Scores

At this time, JetBlue has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, JetBlue has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

JetBlue is part of the Zacks Transportation - Airline industry. Over the past month, Gol Linhas Aereas Inteligentes S.A. , a stock from the same industry, has gained 12.4%. The company reported its results for the quarter ended June 2022 more than a month ago.

Gol Linhas Aereas Inteligentes S.A. reported revenues of $660.88 million in the last reported quarter, representing a year-over-year change of +240.4%. EPS of -$0.43 for the same period compares with -$1.15 a year ago.

For the current quarter, Gol Linhas Aereas Inteligentes S.A. is expected to post a loss of $0.30 per share, indicating a change of +64.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.3% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Gol Linhas Aereas Inteligentes S.A. Also, the stock has a VGM Score of A.


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