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Hawaiian Holdings (HA) Up 9.1% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Hawaiian Holdings (HA - Free Report) . Shares have added about 9.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Hawaiian Holdings due for a pullback? 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 catalysts.

Earnings Beat at Hawaiian Holdings in Q3

Hawaiian Holdings’ earnings (excluding 2 cents from non-recurring items) of $1.72 per share outpaced the Zacks Consensus Estimate of $1.69. However, the bottom line declined 9.9% year over year. Although quarterly revenues of $755.2 million surpassed the Zacks Consensus Estimate of $748.1 million, it dipped marginally year over year.

Passenger revenues accounting for bulk (91.9%) of the top line slipped 0.4% year over year. Airline traffic, measured in revenue passenger miles, inched up 2.7% year over year to 4.67 billion (for total operations) in the quarter under review. Capacity, measured in available seat miles, contracted 0.4% to 5.33 billion. Meanwhile, operating revenue per available seat mile (RASM: a key measure of unit revenue) in the quarter slipped 0.1% year over year. Average fuel cost per gallon declined 11.9% to $1.99 in the third quarter while operating cost per ASM excluding aircraft fuel and non-recurring items increased 4.9%. Economic fuel cost per gallon declined 5.1% to $2.04. During the quarter, Hawaiian Holdings returned $25.7 million to shareholders through $5.7 million in dividends and $20 million in buybacks.

The company anticipates capacity to increase between 3% and 4.5% in the fourth quarter. RASM is projected to decline 0.5-3.5% in the period due to pressures related to average fares in the carrier’s domestic markets. Cost per ASM excluding fuel and non-recurring items is projected to increase 0.5-3.5%. Economic fuel costs are envisioned to be $2.04 per gallon in the December quarter.

Capacity for the full year is expected to rise in the 1.9-2.4% band. Cost per ASM excluding fuel and non-recurring items is projected to increase in the 1.8-2.6% in the current year.  Additionally, economic fuel costs are estimated at $2.05 per gallon in 2019. Capital expenditures for 2019 are predicted in the $410-$430 million range.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 23.3% due to these changes.

VGM Scores

At this time, Hawaiian Holdings has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Hawaiian Holdings has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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