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Why Is Hawaiian Holdings (HA) Down 7.7% Since Last Earnings Report?

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A month has gone by since the last earnings report for Hawaiian Holdings (HA - Free Report) . Shares have lost about 7.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Hawaiian Holdings 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 catalysts.

Earnings Beat at Hawaiian Holdings in Q2

Hawaiian Holdings' second-quarter 2019 earnings (excluding 2 cents from non-recurring items) of $1.23 per share outpaced the Zacks Consensus Estimate of $1.04. However, the bottom line declined 14.6% year over year. Although quarterly revenues of $712.2 million surpassed the Zacks Consensus Estimate of $707.5 million, it dipped marginally year over year.

Passenger revenues accounting for bulk (91.7%) of the top line slipped 0.3% year over year. Airline traffic, measured in revenue passenger miles, inched up 3.6% year over year to 4.49 billion in the quarter under review. Capacity or available seat miles (ASMs) expanded 2.7% to 5.15 billion. Load factor (percentage of seats filled by passengers) improved 80 basis points to 87.1% in the reported quarter as traffic growth outpaced capacity expansion.

Meanwhile, operating revenue per available seat mile (RASM: a key measure of unit revenue) in the quarter slid 3.1% year over year. Average fuel cost per gallon rose 3.4% to $2.14 in the second quarter while non-fuel unit costs inched up 0.3%.

During the quarter, Hawaiian Holdings returned $25.3 million to shareholders through $5.7 million in dividends and $19.6 million in buybacks.

Liquidity

As of Jun 30, 2019, this Zacks Rank #2 (Buy) company’s unrestricted cash, cash equivalents and short-term investments totaled $539 million. While outstanding debt and capital lease obligations were $565 million during the same time frame.

Q3 & 2019 Outlook

The company anticipates capacity to decrease up to 1.5% or increase up to 0.5% in the third quarter. RASM is projected to decline 1.5-4.5% in the current quarter. Non-fuel unit costs are expected to ascend 3.5-6.5% in the ongoing quarter. Economic fuel costs are envisioned to be $2.11 per gallon in the same period.

Capacity for the full year is expected to rise in the 1.5-2.5% band. Non-fuel unit costs are predicted to increase 1-2.5% in the current year. Additionally, fuel costs are estimated at $2.07 per gallon in 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -12.12% due to these changes.

VGM Scores

At this time, Hawaiian Holdings has an average Growth Score of C, though it is lagging a bit on the Momentum Score 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 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hawaiian Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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