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Factors Likely to Influence SkyWest's (SKYW) Q1 Earnings

Zacks Equity Research

SkyWest SKYW is scheduled to release first-quarter 2019 results after the closing bell on Apr 25. The Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at $1.18 and $706.66 million, respectively.

In the last reported quarter, this airline operator surpassed the consensus mark by 19 cents. Results benefited from the company’s fleet transition initiatives. However, operating expenses increased in the same period due to a rise in fuel costs.

As far as earnings surprises are concerned, the St. George, UT-based company is on a firm footing, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters.

SkyWest, Inc. Price and EPS Surprise


SkyWest, Inc. Price and EPS Surprise | SkyWest, Inc. Quote


Investors are keeping their fingers crossed and hoping that SkyWest will continue to deliver solid performance and surpass earnings estimate in the quarter to be reported as well. However, our model indicates that the carrier might not beat on earnings this reporting cycle.

Let’s delve deeper and find out the factors likely to impact SkyWest’s quarterly results.

We expect upbeat passenger revenues to boost the company’s top line in the soon-to-be-reported quarter. Robust traffic during the spring travel period (which started from Mar 1) should lead to an uptick in the load factor (% of seats filled by passengers) during the same period.

Moreover, SkyWest’s efforts to modernize fleet and streamline operations bode well and should drive growth in the soon-to-be-reported quarter. To this end, the carrier aims to reduce the 50-seat jets in its fleet and add new E175 aircraft to its fleet. The addition of these planes (E175 and CRJ900) should boost block hours (a measure of aircraft utilization) in the first quarter of 2019.

Also, lower tax rates are likely to drive the bottom line in the first quarter. The company’s strong balance sheet courtesy of the current tax law induced savings has enabled SkyWest to engage in shareholder-friendly activities (dividend hikes/buybacks). During the January-March period the carrier increased its quarterly dividend by 20% to 12 cents per share (48 cents annualized). We expect the company to provide an update on the above shareholder-friendly activities on the first-quarter conference call.

However, operating expenses are likely to be high in the soon-to-reported quarter. With fuel costs moderating, expenses on wages and benefits might push up operating costs, hurting bottom-line growth.

What Does the Zacks Model Say?

Our proven model does not indicate earnings beat for SkyWest in first-quarter 2019. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: SkyWest has an Earnings ESP of -3.65%. The Most Accurate Estimate is pegged at 4 cents below the Zacks Consensus Estimate.

Zacks Rank: SkyWest carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

While earnings beat looks uncertain for SkyWest, here are some other companies from the Zacks Transportation sector that you may want to consider as our model shows that they have the right combination of elements to post earnings beat in their next releases.

C.H. Robinson CHRW has an Earnings ESP of +0.22% and is a Zacks #3 Ranked player. The company is scheduled to release first-quarter 2019 earnings on Apr 30.

Werner Enterprises WERN has an Earnings ESP of +2.06% and a Zacks Rank #3. The company will announce first-quarter 2019 financial numbers on Apr 25.

Triton International TRTN has an Earnings ESP of +2.51% and is a Zacks #2 Ranked player. The company is scheduled to release first-quarter 2019 earnings on Apr 30.

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