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Is a Beat in Store for Hawaiian Holdings (HA) in Q4 Earnings?

Zacks Equity Research

Hawaiian Holdings, Inc. HA is scheduled to report fourth-quarter 2018 results on Jan 29, after market close.

In the third quarter, the company delivered mixed results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. However, the top line improved year over year on the back of strong passenger revenues.

Hawaiian Holdings has an impressive earnings surprise history. The company’s earnings surpassed the consensus mark in each of the trailing four quarters, the average being 14.4%.

Factors at Play

Hawaiian Holdings is expected to perform well in the fourth quarter on the back of efforts to modernize fleet. The company is continuously remodeling the A330 fleet by adding lie flat premium seats. Additionally, the exit of Island Air has strengthened Hawaiian Holdings’ foothold in Hawaii. Efforts to expand scope of operations are expected to boost top-line results in the to-be-reported quarter.

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Furthermore, strong passenger revenues are anticipated to drive the top line in the to-be-reported quarter, as they account for a major portion of the company’s revenues. The Zacks Consensus Estimate for fourth-quarter 2018 passenger revenues is pegged at $636 million.

Moreover, the current tax law is a boon for U.S.-based transportation companies like Hawaiian Holdings. The significant cut in corporate tax rate is likely to boost cash flow, which will drive the bottom line in the to-be-reported quarter. Additionally, with oil prices declining nearly 40% in the October-December period, fuel costs are expected to be less of a headwind in the to-be-reported quarter. The consensus estimate for fourth-quarter average fuel cost per gallon is pegged at $2.20, lower than $2.26 reported in the third quarter of 2018.

However, we are concerned about the company’s unit revenues and capacity-related woes. These concerns are likely to dent bottom-line growth in the to-be-reported quarter.

Hawaiian Holdings, Inc. Price and EPS Surprise

 

Hawaiian Holdings, Inc. Price and EPS Surprise | Hawaiian Holdings, Inc. Quote

 

What Does the Model Say?

Our proven model shows that Hawaiian Holdings is likely to beat estimates in the to-be-reported quarter, as it has the perfect combination of the following key ingredients:

Earnings ESP: Hawaiian Holdings has an Earnings ESP of +1.63%. The Most Accurate Estimate is at $1 per share, higher than the Zacks Consensus Estimate of 98 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 #3 (Hold). Notably, stocks with a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have higher chances of beating estimates.

Conversely, we caution against stocks with a Zacks Rank #4 (Sell) or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Investors interested in the Zacks Transportation sector may check other companies with the right combination of elements to beat estimates in the upcoming releases.

Expeditors International of Washington, Inc. EXPD has an Earnings ESP of +0.39% and a Zacks Rank #1.  The company will release fourth-quarter 2018 results on Feb 19. You can see the complete list of today’s Zacks #1 Rank stocks here.

Copa Holdings, S.A. CPA has an Earnings ESP of +6.93% and a Zacks Rank #2. The company will release fourth-quarter 2018 results on Feb 13.

Old Dominion Freight Line, Inc. ODFL has an Earnings ESP of +1.85% and a Zacks Rank #3.  The company will release fourth-quarter 2018 results on Feb 7.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

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