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JetBlue Airways (JBLU) Down 7.3% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for JetBlue Airways Corporation (JBLU - Free Report) . Shares have lost about 7.3% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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.

Fourth Quarter Earnings

JetBlue Airways Corporation’s fourth-quarter 2016 earnings (excluding special items) of $0.50 per share beat the Zacks Consensus Estimate by a penny. Earnings declined substantially from the year-ago figure due to higher costs.

Operating revenues came in at $1,641 million. Revenues improved 2.9% from the year-ago figure. The top line was primarily benefitted by a 5.4% increase in other revenues. Passenger revenues climbed 2.7% in the fourth quarter of 2016 to $1,477 million.

Operating Statistics

Capacity, measured in available seat miles, expanded 4.5% year over year. Traffic, measured in revenue passenger miles, grew 6% in the fourth quarter. Load factor (percentage of seats filled by passengers) improved 110 basis points (bps) year over year to 84.7% in the reported quarter as traffic growth outpaced capacity expansion.

Yield per passenger mile fell 3.1% year over year to 13.20 cents in the reported quarter. While passenger revenue per available seat mile (PRASM) declined 1.7% , operating revenue per available seat mile (RASM) decreased 1.5% .

Operating Income and Expenses

In the fourth quarter, total operating expenses increased 6.5% year over year. Average fuel cost per gallon (realized) declined 7.3% to $1.56. JetBlue’s operating cost per available seat mile (CASM) increased 1.9%. Excluding fuel and profit sharing, the metric climbed 5.6%.

Balance Sheet

JetBlue ended 2016 with cash and cash equivalents of $433 million compared with $318 million at the end of 2015. Total debt, at the end of 2016 was $1,384 million as against $1,827 million at the end of 2015. However, JetBlue is constantly working toward reducing its debt levels.

Outlook

For the first quarter of 2017, the carrier expects capacity to increase in the band of 4.5–6.5%. For full-year 2017 the metric is expected to increase in the range of 6.5–8.5%. Consolidated operating cost per available seat mile, excluding fuel, is expected to increase in the band of 3–5% in the first quarter of 2017. For full-year 2017, the metric is still expected to grow in the range of 1–3%.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions

VGM Scores

At this time, JetBlue Airways' stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.

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

Based on our scores, the stock is solely suitable for value  investors.

Outlook

The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.


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