Hawaiian Holdings (HA) Down 25.2% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Hawaiian Holdings (HA). Shares have lost about 25.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Hawaiian Holdings due for a breakout? 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 Q4

Hawaiian Holdings' fourth-quarter 2019 earnings (excluding 8 cents from non-recurring items) of 99 cents per share outpaced the Zacks Consensus Estimate of 87 cents. However, the bottom line dipped 1% year over year. Although quarterly revenues of $708.1 million missed the Zacks Consensus Estimate of $709.3 million it inched up 1.5% year over year.

Passenger revenues accounting for bulk (91.6%) of the top line increased 1.6% year over year. Airline traffic, measured in revenue passenger miles, climbed 5.6% year over year to 4.53 billion in the quarter under review. Capacity or available seat miles (ASMs) expanded 3.7% to 5.26 billion. Load factor (percentage of seats filled by passengers) improved 150 basis points to 86.1% in the reported quarter as traffic growth outpaced capacity expansion.

Meanwhile, operating revenue per available seat mile (RASM: a key measure of unit revenues) in the quarter slid 2.1% year over year. Average fuel cost per gallon decreased 6.8% to $2.05 in the fourth quarter while non-fuel unit costs inched up 0.8%.

During 2019, Hawaiian Holdings returned $91.6 million to shareholders through $68.8 million in buybacks and $22.8 million in dividends.

Liquidity

As of Dec 31, 2019, the company’s unrestricted cash, cash equivalents and short-term investments totaled $619 million while outstanding debt and finance lease obligations were $764 million.

Q1 Outlook

Capacity (or ASMs) is anticipated to increase 7.5-10.5% year over year. RASM is expected to decline 4.5-7.5% in the current quarter. Adjusted Cost per ASM (CASM) excluding fuel is estimated to slip 1.5-4.5%. Additionally, economic fuel cost per gallon is estimated at $1.97.

2020 Outlook

For the current year, ASMs are projected to expand 5.5-8.5%. Adjusted CASM excluding fuel is predicted to either decline up to 2.5% or increase up to 0.5%. Economic fuel cost per gallon is expected to be $1.85. For full-year effective tax rate is forecast in the range of 26-28%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 100% due to these changes.

VGM Scores

Currently, Hawaiian Holdings has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision looks promising. Notably, Hawaiian Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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