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What's in the Offing for JetBlue (JBLU) in Q4 Earnings?

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JetBlue Airways Corporation (JBLU - Free Report) is scheduled to report fourth-quarter 2018 earnings numbers on Jan 24, before the market opens.

In the last reported quarter, the company delivered a positive surprise of 2.4%. However, the bottom line declined 21.8% on a year-over-year basis, primarily due to higher costs. Total operating revenues also fell short of the Zacks Consensus Estimate. Nevertheless, the top line increased 10.5% from the year-ago figure, backed by higher passenger revenues.

Let’s see how things are shaping up for this earnings season.

Factors at Play

Fuel prices, although at modest levels lately, are expected to hamper the company’s bottom line in the fourth quarter. This is because when compared on a year-over-year basis, the fuel price estimate for the quarter to be reported remains pretty high. The carrier estimates fourth-quarter fuel cost, net of hedges, to be $2.48 per gallon. The Zacks Consensus Estimate for the same stands at $2.47 per gallon compared with $1.89 reported in the year-ago quarter.

However, passenger revenues are anticipated to remain strong in the fourth quarter, boosting the top line in turn. The airline forecast revenue per available seat mile (RASM) to climb around 2.4% year over year in the quarter under review. The Zacks Consensus Estimate for the metric is pegged at 13.06 cents, above 12.38 cents reported in the third quarter of 2018.

Additionally, the carrier expects operating cost per available seat mile excluding fuel to dip in the 1.5-3.5% band in the quarter. The consensus mark for non-fuel unit costs stands at 8.36 cents, lower than 8.63 cents reported in fourth-quarter 2017. The lower costs are expected to drive the bottom line.


Earnings Whispers

Our proven model does not conclusively show that JetBlue is likely to beat fourth-quarter estimates. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as elaborated below.

Earnings ESP: JetBlue has an Earnings ESP of -1.25%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: JetBlue carries a Zacks Rank #2, which increases the predictive power of ESP. However, the company’s negative ESP complicates the surprise prediction as only a positive ESP along with a favorable Zacks Rank raises the odds of a likely earnings surprise for a stock.

We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the broader Transportation sector may check out some stocks worth considering, namely ArcBest Corporation (ARCB - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Allegiant Travel Company (ALGT - Free Report) as these possess the perfect combination of elements to surpass expectations in the upcoming releases.

ArcBest has an Earnings ESP of +4.78% and is a Zacks #2 Ranked stock.  The company will report fourth-quarter financial figures on Jan 30.

Expeditors has an Earnings ESP of +0.39% and a Zacks Rank of 1. The company will announce fourth-quarter results on Feb 19. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allegiant has an Earnings ESP of +2.35% and a Zacks Rank of 2. The company is scheduled to release fourth-quarter earnings numbers on Jan 30.

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