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Is a Beat in Store for JetBlue (JBLU) This Earnings Season?

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Zacks Equity Research
·4 min read
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JetBlue Airways Corporation JBLU is scheduled to report fourth-quarter 2020 results on Jan 28, before the opening bell.

The company has a dull earnings record, wherein the bottom line outpaced the Zacks Consensus Estimate in two of the trailing four quarters and missed the same twice. It has a trailing four-quarter negative earnings surprise of 0.2%, on average.

Key Factors to Note

With restrictions easing following the reopening of economies, we expect JetBlue’s fourth-quarter performance to have been better than the September end quarter. Notably, the consensus estimate for passenger revenues suggest an improvement of 39.1% from the prior quarter.  

JetBlue Airways Corporation Price and EPS Surprise

JetBlue Airways Corporation Price and EPS Surprise
JetBlue Airways Corporation Price and EPS Surprise

JetBlue Airways Corporation price-eps-surprise | JetBlue Airways Corporation Quote

The company has been resorting to increasing its capacity from third quarter 2020 following the easing of restrictions.  The Zacks Consensus Estimate for capacity (measured in available seat miles) and traffic (measured in revenue passenger miles) indicates a 26.5% and 63.4% rise from its September quarter’s reported number, respectively. Since expected rise in traffic outweighs expected capacity expansion, load factor (% of seats filled by passengers) is likely to have increased in the to-be-reported quarter. Notably, Zacks Consensus Estimate for load factor in the December quarter is currently pegged at 55% compared with 42.6% reported in third-quarter 2020.

Moreover, low fuel prices are expected to have partly offset the adversities and contributed to the bottom line in the fourth quarter. The consensus mark for average fuel cost per gallon indicates 30% decline from the year-ago quarter’s reported figure.

Despite fuel costs being low, operating cost per available seat mile (CASM) is likely to have increased in the fourth quarter. The Consensus Estimate for the same suggests an improvement of 22.1% from the December end quarter last year.

Earnings Whispers

The proven Zacks model predicts an earnings beat for JetBlue this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: JetBlue has an Earnings ESP of +1.45%. The Most Accurate Estimate stands at a loss of $1.70 per share, while the Zacks Consensus Estimate is pegged at a loss of $1.72 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: JetBlue carries a Zacks Rank #3, currently.

Highlights of Q3

JetBlue incurred a loss (excluding 31 cents from non-recurring items) of $1.75 per share, which compared favorably with the Zacks Consensus Estimate of a loss of $1.91. Results were hurt by the coronavirus-induced weakness in air-travel demand. Moreover, operating revenues of $492 million plunged 76.4% year over year and lagged the Zacks Consensus Estimate of $504.8 million. This steep year-over-year fall was due to 77.8% decrease in passenger revenues, which accounted for bulk (90.4%) of the top line.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also consider American Airlines Group Inc. AAL, Knight-Swift Transportation Holdings Inc. KNX and Landstar System, Inc. LSTR, as these stocks too possess the right combination of elements to beat estimates this reporting cycle.

American Airlines has an Earnings ESP of +2.10% and is Zacks #3 Ranked, presently. The company is slated to release fourth-quarter 2020 results on Jan 28.

Knight-Swift has an Earnings ESP of +1.10% and a Zacks Rank of 3 at present. The company is scheduled to release fourth-quarter 2020 results on Jan 27.

Landstar System has an Earnings ESP of +0.57% and is currently a #3 Ranked player. The company is slated to release fourth-quarter 2020 results on Jan 27.

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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
KnightSwift Transportation Holdings Inc. (KNX) : Free Stock Analysis Report
 
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
 
Landstar System, Inc. (LSTR) : Free Stock Analysis Report
 
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