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Why Hawaiian Holdings (HA) is a Must Add to Your Portfolio

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Honolulu, HI-based Hawaiian Holdings, Inc. HA, the parent company of Hawaiian Airlines, is currently one of the shining stars of the airline industry. The carrier, which transports passengers as well as cargo, has seen its stock price appreciate by 64.2% on the back of increased demand for air travel and constant expansion initiatives. The stock’s impressive performance has helped it outperform the Zacks categorized Transportation-Airline industry on a year-to-date basis. The industry has gained only 9.45% so far this year.

               

Strong Q3

Hawaiian Holdings reported better-than-expected third-quarter earnings and revenues in October this year. The carrier’s adjusted earnings of $1.92 per share were ahead of the Zacks Consensus Estimate by 10 cents. Quarterly revenues of $672 million also surpassed our expectation of $670 million. Results benefited from a 23.1% decline in economic fuel costs to $1.50 per gallon during the quarter.

Operating revenue per available seat mile (RASM: a key measure of unit revenue) in the quarter inched up 1.3% year over year. While announcing its November traffic numbers, the carrier mentioned that it expects fourth-quarter RASM to grow in the range of 3–6%. Earlier, the company had anticipated an increase in the band of 0.5–3.5%.

Estimate Revisions

Upward estimate revisions reflect optimism in a stock’s prospects. Hawaiian Holdings scores impressively on this front as well, with the Zacks Consensus Estimate for the current quarter climbing 8.5% over the last seven days to $1.28 per share. The top line and bottom line at Hawaiian for the fourth quarter are expected to expand between 51.1% and 8.2%, respectively.

The carrier has a solid earnings history outshining the Zacks Consensus Estimate in three of the last four quarters. We are also impressed by the carrier’s consistent efforts to expand its operations. Moreover, the stock has an attractive projected earnings per share growth rate (3 to 5 years) of 15.2% which compares favorably with 10.7%.

Moreover, the stock has a VGM score of “A”.Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. The stock’s Zacks Rank #1 (Strong Buy) when combined with its attractive VGM score makes it a favorable investing option. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Apart from Hawaiian Holdings, investors interested in the airline space may also consider ControladoraVuelaCompañía de Aviación, S.A.B. de C.V. or Volaris VLRS, Copa Holdings CPA and Ryanair Holdings (RYAAY - Free Report) . All three stocks possess the same bullish rank as Hawaiian Holdings.

The Zacks Consensus Estimate has increased 21cents to $4.76 per share for the current year at Copa Holdings over the last three months.

The Zacks Consensus Estimate has increased 26 cents to $1.59 per share for the current year at Volaris over the last three months.

The Zacks Consensus Estimate has increased 37cents to $5.91 per share for the current year at Ryanair Holdings over the last two months.

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