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Hawaiian Holdings Down 15.5% in the Past 3 Months: Here's Why

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Zacks Equity Research
·3 min read
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Shares of Hawaiian Holdings HA, the holding company of Hawaiian Airlines, have lost 15.5% compared with the industry’s 5.2% increase in the past three months.

Why This Dismal Performance & the Way Forward

Like other airlines, Hawaiian Holdings is reeling under the effects of the coronavirus pandemic. The demand scenario, which started deteriorating in late January, began to worsen in mid-March. Due to declining passenger revenues (down 57.5% in first-half 2020), the carrier reported wider-than-expected loss in each of the two quarters of 2020.

Thanks to disappointing demand, the carrier provided a dull capacity outlook for the September quarter.  Hawaiian Holdings expects third-quarter capacity to decline 87% year over year (earlier outlook provided on Jul 28 projected 86% plunge). Notably, third-quarter revenue passenger miles and the total number of passengers flown are down roughly 96% and 87%, respectively, on a year-over-year basis (data as of Aug 31). This disturbing demand trend is expected to continue for the remainder of the September quarter.

With the global health peril still persisting, tourism to Hawaii is likely to be affected in the near term as well. This implies that near-term prospects of this stock remain bleak. Consequently, the Zacks Consensus Estimate for 2020 bottom line is currently pegged at a loss of $9.86 cents, moving south from a loss of $7.62 over the past 60 days.

Zacks Rank & Stocks to Consider

Hawaiian Holdings currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Zacks Transportation sector are Knight-Swift Transportation Holdings KNX, Canadian Pacific Railway Limited CP and Werner Enterprises WERN. Knight-Swift sports a Zacks Rank #1(Strong Buy), while Canadian Pacific and Werner carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Knight-Swift, Canadian Pacific and Werner is pegged at 15%, 8% and 8.5%, respectively.

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