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What's in Store for Alaska Air Group's (ALK) Q1 Earnings?

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Alaska Air Group, Inc. (ALK - Free Report) is slated to release first-quarter 2020 earnings results on May 5, before market open.

Similar to other airlines, Alaska Air Group’s operations were severely hit by the coronavirus pandemic. Evidently, the Zacks Consensus Estimate for first-quarter earnings has been revised significantly downward over the last 60 days.
 
Let’s delve into the details.

Factors at Play

Amid dwindling air travel demand and government travel restrictions due to coronavirus concerns, Alaska Air Group undertook massive capacity cuts. Consequently, the carrier is expected to have suffered substantial loss of passenger revenues in the first quarter. The Zacks Consensus Estimate for passenger revenues indicates a 15.6% decline from the fourth quarter of 2019 level. With passenger revenues accounting for more than 90% of the top line, total revenues are also expected to have been affected significantly.

Additionally, cargo demand declined in the first quarter due to supply chain disruptions caused by the coronavirus pandemic. This is likely to get reflected in cargo revenues. Notably, the Zacks Consensus Estimate for cargo revenues suggests a 4.5% drop from the previous quarter’s reported figure.

However, with fuel expenses comprising a major chunk of airline expenditures, low fuel prices are expected to reflect on the bottom-line number, partly offsetting the substantial loss of revenues. The Zacks Consensus Estimate for economic fuel cost per gallon hints at a 5.4% decline from the fourth-quarter 2019 number.

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

 

Earnings Whispers

The proven Zacks model predicts an earnings beat for Alaska Air Group in the first quarter of 2020. This is because 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 see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Alaska Air Group has an Earnings ESP of +11.06% as the Most Accurate Estimate is pegged at a loss of $1.18 and the Zacks Consensus Estimate is pinned at a loss of $1.33. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Alaska Air Group carries a Zacks Rank #3.

Highlights of Q4 Earnings

In the last reported quarter, the company delivered a positive earnings surprise of 3.6%. Moreover, the bottom line surged 94.7% year over year on low fuel costs. Total revenues also surpassed the Zacks Consensus Estimate and increased approximately 8% year over year on higher passenger revenues.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider Allegiant Travel Company (ALGT - Free Report) , Hawaiian Holdings (HA - Free Report) and Golar LNG Ltd. (GLNG - Free Report) as these stocks too possess the right combination of elements to beat on earnings this reporting cycle.

Allegiant has an Earnings ESP of +14.63% and a Zacks Rank #3.

Hawaiian Holdings has an Earnings ESP of +15.21% and a Zacks Rank #3.

Golar LNG has an Earnings ESP of +1,000.09% and a Zacks Rank #2.
 
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