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Will Low Fuel Costs Aid Alaska Air Group's (ALK) Q3 Earnings?

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Alaska Air Group (ALK - Free Report) is scheduled to report third-quarter 2019 results on Oct 24, after the market closes.

The Zacks Consensus Estimate for the company’s third-quarter earnings has been revised 15.2% upward in the past 60 days. Let’s delve into the factors that might have influenced the company’s quarterly performance.

Consistent rise in travel demand must have boosted passenger revenues in the third quarter. Evidently, the Zacks Consensus Estimate for passenger revenues suggests an approximate 7.6% rise from the year-ago reported number. Additionally, total unit revenues (total revenue per available seat mile or RASM) are likely to have substantially improved in the to-be-reported quarter. For the third quarter, management expects 4.4% year-over-year increase in TRASM.

With fuel expenses comprising a major chunk of airline expenditures, low fuel prices are likely to get reflected in Alaska Air Group’s bottom-line number. While the company expects fuel costs to decline 8.6% in the soon-to-be-reported quarter, the Zacks Consensus Estimate for the same indicates a 4.7% fall from the reported figure in the third quarter of 2018.

However, escalating non-fuel unit costs might have partly affected bottom-line growth in the quarter. The company expects non-fuel unit costs (excluding special items) to rise approximately 3.4% year over year in the third quarter. Meanwhile, the consensus mark for the same suggests an approximate 4% increase from the number reported in third-quarter 2018.

Alaska Air Group, Inc. Price and EPS Surprise

 

Alaska Air Group, Inc. Price and EPS Surprise

Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. Quote

 

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Alaska Air Group this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Alaska Air Group has an Earnings ESP of +2.58% as the Most Accurate Estimate is pegged at $2.57, higher than the Zacks Consensus Estimate of $2.50.

Zacks Rank: Alaska Air Group carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q2 Earnings

In the last reported quarter, the company delivered a positive earnings surprise of 2.84%. Total revenues also surpassed the Zacks Consensus Estimate. Moreover, both the top and the bottom line improved year over year on higher passenger revenues.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also check out American Airlines Group Inc. (AAL - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Allegiant Travel Company (ALGT - Free Report) as these stocks too possess the right mix of elements to beat on earnings in their next releases.

American Airlines has an Earnings ESP of +1.64% and a Zacks Rank #3. The company will announce third-quarter earnings results on Oct 24.

Expeditors is a #3 Ranked stock and has an Earnings ESP of +0.74%. The company will report third-quarter 2019 results on Nov 5.

Allegiant has an Earnings ESP of +1.39% and is Zacks #3 Ranked. The company will announce third-quarter earnings results on Oct 24.

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