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What's Ahead for these Airlines in Q2 Earnings? ALK, HA, LUV
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Stocks in the airline space are grappling with multiple headwinds like a surge in terror attacks, the Brexit vote and issues pertaining to unit revenues. The rough times are also reflected by the bearish Zacks industry rank of 248 of the Trans-Airline segment which places it in the bottom 1/3rd of the 260+ industry groups.
The attacks are hurting airline stocks big time due to the associated fears of slackening air travel demand on security fears. Moreover, the Brexit vote late last month and the subsequent uncertainty put airline stocks at risk, especially those with significant exposure to the U.K. In the wake of the uncertainty arising from the Brexit vote, Delta Air Lines (DAL - Free Report) announced its decision last week, while revealing its second-quarter results, to trim 6 points of the U.S.-U.K. capacity from its winter schedule.
Apart from such issues, airline players are constantly addressing problems related to passenger revenue per available seat mile (PRASM: a measure of unit revenue). Lower fuel surcharges on international flights due to weak oil prices have been one of the main reasons behind the persistent decline in PRASM. We expect the above headwinds to hurt second-quarter results of the airline players.
The concerns are also reflected in the bleak projections for the transportation sector (of which airlines are a part). According to our latest earnings trends report, second-quarter earnings for the transportation sector (one of the 16 Zacks sectors) are expected to decline 13.9%. The top line is expected to shrink 1.9%.
Despite the headwinds, the start to the second-quarter earnings season has been impressive for airline companies with key players like Delta and United Continental Holdings (UAL - Free Report) reporting better-than-expected earnings.
We will get a clearer picture of the performance in the airline space by the end of this week with a lot more reports scheduled to come in. Meanwhile, Jul 21 is going to be a busy day for the sector with heavyweights like Southwest Airlines Co. (LUV - Free Report) , Alaska Air Group (ALK - Free Report) and Hawaiian Holdings Inc. (HA - Free Report) reporting their quarterly figures. Let’s take a look at how these stocks are likely to perform.
Southwest Airlines, a Dallas TX-based low-cost carrier, is scheduled to report second-quarter results before market opens. In the first quarter of 2016, the carrier reported better-than-expected earnings, aided by low fuel costs. However, with airline stocks presently in the doldrums, an earnings beat might not be in the cards for the carrier this time around.
According to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase its odds of an earnings surprise. Even though, However, Southwest Airlines has a positive Earnings ESP (+0.82), the company’s Zacks Rank # 5 (Strong Sell) acts as a spoiler making an earnings beat unlikely. As it is, we caution against Sell-rated stocks going into the earnings announcement (read more: Southwest Airlines Q2 Earnings: Disappointment in Store?).
Hawaiian Holdings, the parent company of Hawaiian Airlines, is scheduled to report second-quarter 2016 results after the closing bell. The carrier is unlikely to beat the Zacks Consensus Estimate for earnings, as per our quantitative model. This is because the company has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold) (read more: What's in Store for Hawaiian Airlines' Q2 Earnings?).
Alaska Air Group, based in Seattle, WA, is also not likely to beat the Zacks Consensus Estimate for earnings in the second quarter of 2016. Results are scheduled to be announced before market opens. Previously our quantitative model had hinted at an earnings ESP of +2.48 but now the measure stands at 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate of $2.07. However, the carrier's Zacks Rank #5 makes an earnings beat unlikely in the quarter (read more: Alaska Air Q2 Earnings: Disappointment in Store?).
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What's Ahead for these Airlines in Q2 Earnings? ALK, HA, LUV
Stocks in the airline space are grappling with multiple headwinds like a surge in terror attacks, the Brexit vote and issues pertaining to unit revenues. The rough times are also reflected by the bearish Zacks industry rank of 248 of the Trans-Airline segment which places it in the bottom 1/3rd of the 260+ industry groups.
The attacks are hurting airline stocks big time due to the associated fears of slackening air travel demand on security fears. Moreover, the Brexit vote late last month and the subsequent uncertainty put airline stocks at risk, especially those with significant exposure to the U.K. In the wake of the uncertainty arising from the Brexit vote, Delta Air Lines (DAL - Free Report) announced its decision last week, while revealing its second-quarter results, to trim 6 points of the U.S.-U.K. capacity from its winter schedule.
Apart from such issues, airline players are constantly addressing problems related to passenger revenue per available seat mile (PRASM: a measure of unit revenue). Lower fuel surcharges on international flights due to weak oil prices have been one of the main reasons behind the persistent decline in PRASM. We expect the above headwinds to hurt second-quarter results of the airline players.
The concerns are also reflected in the bleak projections for the transportation sector (of which airlines are a part). According to our latest earnings trends report, second-quarter earnings for the transportation sector (one of the 16 Zacks sectors) are expected to decline 13.9%. The top line is expected to shrink 1.9%.
Despite the headwinds, the start to the second-quarter earnings season has been impressive for airline companies with key players like Delta and United Continental Holdings (UAL - Free Report) reporting better-than-expected earnings.
We will get a clearer picture of the performance in the airline space by the end of this week with a lot more reports scheduled to come in. Meanwhile, Jul 21 is going to be a busy day for the sector with heavyweights like Southwest Airlines Co. (LUV - Free Report) , Alaska Air Group (ALK - Free Report) and Hawaiian Holdings Inc. (HA - Free Report) reporting their quarterly figures. Let’s take a look at how these stocks are likely to perform.
Southwest Airlines, a Dallas TX-based low-cost carrier, is scheduled to report second-quarter results before market opens. In the first quarter of 2016, the carrier reported better-than-expected earnings, aided by low fuel costs. However, with airline stocks presently in the doldrums, an earnings beat might not be in the cards for the carrier this time around.
According to our quantitative model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase its odds of an earnings surprise. Even though, However, Southwest Airlines has a positive Earnings ESP (+0.82), the company’s Zacks Rank # 5 (Strong Sell) acts as a spoiler making an earnings beat unlikely. As it is, we caution against Sell-rated stocks going into the earnings announcement (read more: Southwest Airlines Q2 Earnings: Disappointment in Store?).
SOUTHWEST AIR Price and EPS Surprise
SOUTHWEST AIR Price and EPS Surprise | SOUTHWEST AIR Quote
Hawaiian Holdings, the parent company of Hawaiian Airlines, is scheduled to report second-quarter 2016 results after the closing bell. The carrier is unlikely to beat the Zacks Consensus Estimate for earnings, as per our quantitative model. This is because the company has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold) (read more: What's in Store for Hawaiian Airlines' Q2 Earnings?).
HAWAIIAN HLDGS Price and EPS Surprise
HAWAIIAN HLDGS Price and EPS Surprise | HAWAIIAN HLDGS Quote
Alaska Air Group, based in Seattle, WA, is also not likely to beat the Zacks Consensus Estimate for earnings in the second quarter of 2016. Results are scheduled to be announced before market opens. Previously our quantitative model had hinted at an earnings ESP of +2.48 but now the measure stands at 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate of $2.07. However, the carrier's Zacks Rank #5 makes an earnings beat unlikely in the quarter (read more: Alaska Air Q2 Earnings: Disappointment in Store?).
ALASKA AIR GRP Price and EPS Surprise
ALASKA AIR GRP Price and EPS Surprise | ALASKA AIR GRP Quote
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