It has been about a month since the last earnings report for Hawaiian Holdings (HA). Shares have lost about 7.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hawaiian Holdings due for a breakout? 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.
Earnings Beat at Hawaiian Holdings in Q1
Hawaiian Holdings' first-quarter 2019 earnings (excluding 8 cents from non-recurring items) of 67 cents outpaced the Zacks Consensus Estimate by a penny. However, the bottom line declined year over year. Quarterly revenues of $656.8 million also missed the Zacks Consensus Estimate of $660.3 million and dipped 1.3% year over year as well.
Passenger revenues accounting for bulk (91.6%) of the top line slipped 1.7% year over year. Airline traffic, measured in revenue passenger miles, inched up 2.4% year over year to 4.13 billion in the quarter under review. Capacity or available seat miles (ASMs) expanded 2.5% to 4.85 billion. Load factor (percentage of seats filled by passengers) contracted 10 basis points to 85.1% in the reported quarter.
Meanwhile, operating revenue per available seat mile (RASM: a key measure of unit revenue) in the quarter slid 3.7% year over year. Average fuel cost per gallon rose 2% to $2 in the first quarter while non-fuel unit costs increased 1.4%.
Q2 & 2019 Outlook
The company anticipates capacity to increase 1.5-3.5% in the second quarter. RASM is projected to decline 2-5% in the current quarter. Non-fuel unit costs are expected to either decrease 0.5% or increase up to 2.5% in the ongoing quarter. Economic fuel costs are envisioned to be $2.19 per gallon in the same time period.
Capacity for the full year is expected to rise in the 1.5-4.5% band. Non-fuel unit costs are predicted to be either flat or rise up to 3% in the current year. Additionally, fuel costs are estimated at $2.16 per gallon in 2019.
As of Mar 31, 2019, the company’s unrestricted cash, cash equivalents and short-term investments totaled $532 million. While outstanding debt and capital lease obligations were $613 million during the same time frame.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Hawaiian Holdings has an average Growth Score of C, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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