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What's in Store for Hawaiian Holdings (HA) in Q4 Earnings?

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Hawaiian Holdings, Inc. (HA - Free Report) is slated to release fourth-quarter 2019 results on Jan 30, after the market opens.

The Zacks Consensus Estimate for fourth-quarter earnings has been revised downward by 2 cents in the past 60 days.

Let’s take a look at the factors that might have induced this bleak outlook.

Hawaiian Holdings has been witnessing pricing pressure in its primary market of Hawaii ever since Southwest Airlines (LUV - Free Report) began operations to Hawaii on Mar 17, 2019. As has been the case over the last few quarters, this is likely to have affected passenger revenues (accounting for more than 90% of the top line) in the fourth quarter.

Further, Southwest Airlines’ entry in Hawaii hurt Hawaiian Holdings’ inter-island travel demand. This, in turn, is expected to have hampered operating revenues per available seat miles (RASM: a key measure of unit revenues). The Zacks Consensus Estimate for RASM indicates a 1.9% dip from the year-ago reported figure. Additionally, the company anticipates RASM to have slipped 0.5-3.5% in the soon-to-be-reported quarter due to pressures related to average fares in its domestic markets.

However, with fuel expenses comprising a major chunk of airline expenditures, low fuel prices are expected to have driven the bottom line. The Zacks Consensus Estimate for average fuel cost per gallon suggests a 7.6% decline from that reported in fourth-quarter 2018. The airline expects economic fuel costs to have been $2.04 per gallon in the December quarter, implying an 8.1% decrease from the prior-year reported number.

Hawaiian Holdings, Inc. Price and EPS Surprise

 

Hawaiian Holdings, Inc. Price and EPS Surprise

Hawaiian Holdings, Inc. price-eps-surprise | Hawaiian Holdings, Inc. Quote

Earnings Whispers

The proven Zacks model does not conclusively predict an earnings beat for Hawaiian Holdings this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Hawaiian Holdings has an Earnings ESP of -11.24% as the Most Accurate Estimate is pegged at 77 cents, lower than the Zacks Consensus Estimate of 87 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Hawaiian Holdings carries a Zacks Rank #4 (Sell).

Highlights of Q3 Earnings

In the last reported quarter, the company delivered a positive earnings surprise of 1.8%. However, the bottom line fell 9.9% year over year. Although quarterly revenues surpassed the Zacks Consensus Estimate, it  slid marginally year over year. Low passenger revenues affected results.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Canadian Pacific Railway Limited (CP - Free Report) and Spirit Airlines, Inc. (SAVE - Free Report) as these stocks possess the right combination of elements to beat on earnings in their next releases.

Canadian Pacific has an Earnings ESP of +0.40% and a Zacks Rank #3. The company will announce fourth-quarter financial numbers on Jan 29.

Spirit Airlines has an Earnings ESP of +3.24% and a Zacks Rank #2. The company is set to report fourth-quarter earnings on Feb 5.

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