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Time to Buy Airlines ETF on Mixed-to-Upbeat Earnings?

Sanghamitra Saha

So far, the earnings season has been mixed-to-upbeat for the airlines industry. Most of the big airlines have beaten on both the lines while a few reported mixed results. Airline companies belong to a top-ranked Zacks industry (top 7%) and top-ranked Zacks sector (top 38%). Let’s delve a little deeper (read: Sector ETFs & Stocks to Bet On This Earnings Season).

Inside Q2 Numbers

Delta Airlines’ DAL second-quarter earnings (excluding 14 cents from non-recurring items) of $2.35 per share surpassed the Zacks Consensus Estimate of $2.29. Moreover, the bottom line increased 32.8% on a year-over-year basis. Operating revenues of $12.54 million surpassed the Zacks Consensus Estimate of $12.5 million. Revenues improved from the year-ago number.

For 2019, Delta raised its earnings per share projection. It now expects full-year earnings per share between $6.75 and $7.25 (earlier view: $6-$7). The mid-point of the guided range ($7) is above the Zacks Consensus Estimate of $6.93. The stock has a Zacks Rank #1 (Strong Buy).

United Airlines Holdings’ UAL second-quarter 2019 earnings per share (excluding 19 cents from non-recurring items) of $4.21 surpassed the Zacks Consensus Estimate of $4.07. The bottom line improved more than 30% year over year, mainly on lower fuel costs. Also, operating revenues increased 5.8% to $11.40 billion in the quarter and beat the Zacks Consensus Estimate of $11.36 billion as well. Higher passenger revenues drove the top line.

United Airlines now projects 2019 earnings between $10.5 and $12 per share (prior view: $10-$12). The mid-point — $11.25 — of the guided range is marginally above the Zacks Consensus Estimate of $11.2. The stock has a Zacks Rank #2 (Buy).

JetBlue Airways JBLU reported better-than-expected earnings and revenues in the second quarter of 2019. The bottom line (excluding 1 cent from non-recurring items) came in at 60 cents per share, which outpaced the Zacks Consensus Estimate of 57 cents. Moreover, quarterly earnings increased 57.9% on a year-over-year basis on prudent cost management. Operating revenues totaled $2.11 billion, which surpassed the Zacks Consensus Estimate of $2.10 billion. The stock has a Zacks Rank #1.

American Airlines Group’s AAL second-quarter 2019 earnings (excluding 33 cents from non-recurring items) of $1.82 per share surpassed the Zacks Consensus Estimate by 5 cents. Moreover, the bottom line increased on a year-over-year basis. Revenues totaled $11.96 billion, in line with the Zacks Consensus Estimate. However, the top line improved 2.7% on a year-over-year basis. The stock has a Zacks Rank #3 (Hold).

Low-cost carrier Southwest Airlines Co. LUV delivered second-quarter 2019 earnings per share of $1.37, beating the Zacks Consensus Estimate of $1.35. Moreover, the bottom-line improved year over year despite higher costs from the MAX groundings. Operating revenues of $5.91 billion lagged the Zacks Consensus Estimate of $5.93 billion. However, the top line rose 2.9% year over year. The stock has a Zacks Rank #3.

Alaska Air Group Inc. ALK delivered second-quarter 2019 adjusted earnings per share (excluding 6 cents from non-recurring items) of $2.17, beating the Zacks Consensus Estimate of $2.11. Moreover, the bottom line improved substantially year over year on higher revenues. Revenues came in at $2.29 billion, above the Zacks Consensus Estimate of $2.28 billion. The top line also rose year over year. The stock has a Zacks Rank #2.

U.S. Global Jets ETF JETS in Focus

The $58-million fund holds more than 30 stocks in its portfolio and is concentrated on a few individual securities. United Airlines (12.77%), Delta Airlines (12.7%), American Airlines (11.99%) and Southwest Airlines (11.83%) take the first four positions in the fund.    

Alaska Air and JetBlue hold the fifth and eighth position in the fund with a 3.97% and 3.73% weight, respectively. The product charges 60 bps in fees (see all industrials ETFs).

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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
 
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
 
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
 
U.S. Global Jets ETF (JETS): ETF Research Reports
 
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