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A month has gone by since the last earnings report for Hawaiian Holdings (HA). Shares have added about 45% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hawaiian Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Wider-Than-Expected Loss in Q1
Hawaiian Holdings’ first-quarter 2020 loss (excluding $2.40 from non-recurring items) of $1.00 per share was wider than the the Zacks Consensus Estimate of a loss of 74 cents. The carrier reported earnings of 67 cents in first-quarter 2019. Moreover, quarterly revenues of $559.1 million missed the Zacks Consensus Estimate of $564 million, down 14.9% year over year.
Due to massive drop in travel demand due to the COVID-19 pandemic, passenger revenues (accounting for 90% of the top line) declined 16.3% year over year. Airline traffic, measured in revenue passenger miles, fell 10.1% year over year to 3.71 billion in the quarter under review. Capacity or available seat miles (ASMs) expanded 2.6% to 4.97 billion. Load factor (percentage of seats filled by passengers) deteriorated 1050 basis points to 74.6% in the reported quarter as capacity expanded while traffic declined
Meanwhile, operating revenue per available seat mile (RASM: a key measure of unit revenues) in the quarter fell 17.1% year over year. Average fuel cost per gallon (economic) dropped 8.5% to $1.83 in the first quarter, while non-fuel unit costs fell 0.9%.
As of Mar 31, 2020, the company’s unrestricted cash, cash equivalents and short-term investments totaled $815 million. Outstanding debt and finance lease obligations were $976 million.
Due to COVID-19 pandemic uncertainties, Hawaiian Holdings is unable to provide its detailed guidance for second-quarter2020. The company expects its May 2020 capacity to plunge 91% compared with the year-ago period’s tally. Operating expenses are expected to decline at a slower pace than capacity.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 23.02% due to these changes.
At this time, Hawaiian Holdings has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions 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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