Yahoo Finance Is Hawaiian Holdings Inc (NASDAQ:HA) An Industry Laggard Or Leader?
Hawaiian Holdings Inc (NASDAQ:HA), a US$1.9b small-cap, operates in the airline industry which is expected to face two headwinds – rise in fuel price and slowdown in global traffic growth. Transport analysts are forecasting for the whole industry, negative growth in the upcoming year , and a massive growth of 31% over the next couple of years. However this rate still came in below the growth rate of the US stock market as a whole. Today, I will analyse the industry outlook, and also determine whether Hawaiian Holdings is a laggard or leader relative to its transportation sector peers.
See our latest analysis for Hawaiian Holdings
What’s the catalyst for Hawaiian Holdings’s sector growth?
The airline sector has recently benefited from the low oil prices driving up profit margins. In the past year, the industry delivered growth in the teens, though still underperforming the wider US stock market. Hawaiian Holdings leads the pack with its impressive earnings growth of 68% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Hawaiian Holdings poised to deliver a -6.5% growth over the next couple of years compared to the industry’s -13%. This growth may make Hawaiian Holdings a more expensive stock relative to its peers.
Is Hawaiian Holdings and the sector relatively cheap?
The airline industry is trading at a PE ratio of 9.42x, lower than the rest of the US stock market PE of 20.28x. This means the industry, on average, is relatively undervalued compared to the wider market – a potential mispricing opportunity here! Furthermore, the industry returned a higher 24% compared to the market’s 10%, making it a potentially attractive sector. On the stock-level, Hawaiian Holdings is trading at a PE ratio of 5.43x, which is relatively in-line with the average airline stock. In terms of returns, Hawaiian Holdings generated 39% in the past year, which is 16% over the airline sector.
Next Steps:
If Hawaiian Holdings has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a airline industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the transportation sector. However, before you make a decision on the stock, I suggest you look at Hawaiian Holdings’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has HA’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Hawaiian Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
