Is a Beat in Store for Alaska Air (ALK) in Q3 Earnings?
Alaska Air Group, Inc. ALK is scheduled to report third-quarter 2023 results on Oct 19, before market open.
The company has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the preceding four quarters and missing once, the average miss being 2.72%. The Zacks Consensus Estimate for third-quarter earnings has been revised 33.3% upward over the past 90 days.
Let’s see how things have shaped up for Alaska Air this earnings season.
Q3 Expectations
The Zacks Consensus Estimate for Alaska Air’s third-quarter 2023 revenues is pegged at $2.88 billion, indicating 1.7% growth year over year. The top line is likely to have been aided bycontinued recovery in air-travel demand.
On the back of upbeat air-travel demand and favorable pricing, the company expects to boost its fleet and workforce to meet the anticipated high demand. ALK expects third-quarter 2023 total revenues to increase in the 1-2% range from third-quarter 2022 actuals (the earlier projection was for a 0-3% increase).
To match the upbeat demand, available seat miles (a measure of capacity) are now expected to have increased approximately 13% in third-quarter 2023 from the third quarter of 2022 actuals (earlier guidance: up 10-13%). Our estimate indicates an increase of 6.8% year over year.
Cost per available seat mile, excluding fuel and special items, (or non-fuel unit costs), is now expected to be down 1-2% (earlier guidance: down 0-2%).
However, expenses related to fuel prices are likely to have weighed on ALK’s bottom-line growth. Alaska Air now expects the fuel cost per gallon in the $3.15-$3.25 band (the earlier guidance was in the $2.7-$2.8 range). Our estimate is pegged at $3.22 per gallon.
Due to high costs, the third-quarter adjusted pre-tax margin is now expected to be in the 10-12% range (earlier guidance was 14-16%).
What Our Model Says
Our proven model predicts an earnings beat for Alaska Air this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Alaska Air has an Earnings ESP of +0.66% and a Zacks Rank #3.
Alaska Air Group, Inc. Price and EPS Surprise
Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. Quote
Highlights of Q2
Alaska Air’s second-quarter 2023 earnings per share of $3.00, outpaced the Zacks Consensus Estimate of $2.70 and improved 37% year over year.
Operating revenues of $2,838 million beat the Zacks Consensus Estimate of $2,780.5 million. The top line jumped 7% year over year, with passenger revenues accounting for 91.5% of the top line and increasing 7% due to continued recovery in air-travel demand.
Other Stocks to Consider
Here are a few stocks from the broader Zacks Transportation sector that investors may consider, as our model shows that these have the right combination of elements to beat on their third-quarter 2023 earnings:
Kirby Corporation KEX has an Earnings ESP of +6.52% and a Zacks Rank #2. KEX will release results on Oct 26. You can see the complete list of today’s Zacks #1 Rank stocks here.
KEX has an expected earnings growth rate of 56.92% for third-quarter 2023. KEX delivered a trailing four-quarter earnings surprise of 8.03%, on average.
The Zacks Consensus Estimate for KEX’s third-quarter 2023 revenues is pegged at $794.60 million, indicating growth of 6.54% year over year.
Old Dominion Freight Line, Inc. (ODFL) has an Earnings ESP of +0.40% and a Zacks Rank #2. ODFL will release results on Oct 25.
The Zacks Consensus Estimate for ODFL’s third-quarter 2023 earnings has been revised upward by 1.4% in the past 90 days. ODFL delivered a trailing four-quarter earnings surprise of 3.86%, on average.
Landstar System, Inc. LSTR has an Earnings ESP of +0.06% and a Zacks Rank #3. LSTR will release results on Oct 25.
LSTR delivered a trailing four-quarter earnings surprise of 1.71%, on average. Shares of LSTR have gained 10.1% so far this year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Old Dominion Freight Line, Inc. (ODFL) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Kirby Corporation (KEX) : Free Stock Analysis Report
Landstar System, Inc. (LSTR) : Free Stock Analysis Report
