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What's in Store for Hawaiian Holdings (HA) in Q4 Earnings?

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Hawaiian Holdings HA is scheduled to report fourth-quarter 2020 results on Jan 26, after market close.

The company has a mediocre average earnings track record. Its bottom line surpassed estimates in two of the last four quarters (lagging estimates in the other two), the average beat being 7.9%.

The Zacks Consensus Estimate for the December-quarter bottom line has widened to a loss of $3.38 from $2.27 loss over the past 90 days.

Against this backdrop, let’s take a look at the factors that are expected to have impacted the company’s fourth-quarter performance.

Akin to the third quarter, weak air-travel demand amid coronavirus concerns is expected to have affected the airline’s passenger revenues. The Zacks Consensus Estimate for fourth-quarter passenger revenues indicates an approximate 84.3% plunge from the year-ago period’s reported number.

Due to the weakness in passenger revenues, the consensus mark for passenger revenue per available seat miles (PRASM: a key measure of unit revenues) is pegged at a fall 43.2% in the final quarter of 2020 from the year-ago period’s reported figure. Notably, the Zacks Consensus Estimate for fourth-quarter 2020 traffic (measured in revenue passenger miles) indicates an 87.9% decrease from the figure reported in fourth-quarter 2019.

To match the low-demand scenario, Hawaiian Holdings reduced its capacity significantly. For the fourth quarter, the carrier expects capacity to decline 70% year over year. The Zacks Consensus Estimate for the same also suggests a 72.5% drop from the level reported in the fourth quarter of 2019. With traffic decreasing at a greater rate than capacity, load factor (% of seats filled by passengers) is also likely to have fallen in the December quarter. Consequently, the Zacks Consensus Estimate for fourth-quarter 2020 passenger load factor is currently pegged at 40.9%, indicating a massive slump from 86% reported in fourth-quarter 2019.

However, moderate fuel costs are likely to have provided some relief to the depressed passenger revenues, thereby supporting the company’s bottom line. The Zacks Consensus Estimate for fourth-quarter 2020 expenses on aircraft fuel indicates a 77.8% decline from the figure reported in fourth-quarter 2019. Also, with most of the carrier’s fleet remaining grounded/under-utilized, fuel gallons consumed are likely to have been low. As a result, the Zacks Consensus Estimate for fourth-quarter 2020 fuel gallons consumed hints at a 61.8% plummet from the reading recorded in fourth-quarter 2019.

Earnings Whispers

The proven Zacks model does not conclusively predict a bottom-line outperformance for Hawaiian Holdings this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Hawaiian Holdings has an Earnings ESP of -3.64%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Hawaiian Holdings carries a Zacks Rank #5 (Strong Sell).

Highlights of Q3 Earnings

In the last reported quarter, the company witnessed a negative earnings surprise of 5.6%. Quarterly revenues too missed the Zacks Consensus Estimate and also tumbled 89.9% year over year due to the 94.3% fall in passenger revenues.

Stocks to Consider

Investors interested in the broader Transportation sector may consider C.H. Robinson Worldwide, Inc. CHRW, Knight-Swift Transportation Holdings Inc. KNX and Landstar System, Inc. LSTR as these stocks possess the right combination of elements to beat estimates this reporting cycle.

C.H. Robinson has an Earnings ESP of +0.12% and is Zacks #3 Ranked, presently. The company will release fourth-quarter 2020 results on Jan 26.

Knight-Swift has an Earnings ESP of +1.10% and a Zacks Rank of 3 at present. The company will release fourth-quarter 2020 results on Jan 27.

Landstar System has an Earnings ESP of +0.57% and is currently a #3 Ranked player. The company will release fourth-quarter 2020 results on Jan 27.

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