U.S. Markets closed

The Zacks Analyst Blog Highlights: Delta Air Lines, United Continental Holdings, Allegiant Travel, Southwest Airlines and JetBlue Airways

Zacks Equity Research
Comtech Telecommunications (CMTL) closed the most recent trading day at $26.47, moving +1.26% from the previous trading session.

For Immediate Release

Chicago, IL – April 19, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Delta Air Lines DAL, United Continental Holdings UAL, Allegiant Travel Company ALGT, Southwest Airlines Co. LUV and JetBlue Airways Corporation JBLU.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday’s Analyst Blog:

Airline Stock Roundup: DAL, UAL Beat Earnings & More

Last week, Delta Air Lines kick-started the first-quarter earnings season for the airline space. This Atlanta, GA-based carrier reported better-than-expected revenues and earnings per share. However, high fuel costs contributed to a year-over-year decline in earnings.

United Continental Holdings also reported better-than-expected results in the quarter. Results were aided by strong demand for air travel and higher ticket prices. This Chicago-based carrier’s decision to trim its capacity growth plans in the current year is also encouraging.

On the non-earnings front, Allegiant Travel Company grabbed headlines for a wrong reason. Shares of the carrier tanked following a news report aired on television, which questioned the safety standards on its flights. Currently, the allegations are being investigated by Kaplan Fox & Kilsheimer LLP.

Meanwhile, Southwest Airlines Co. invited the attention of regulators, after an engine on one of its planes (Boeing 737-700) exploded mid-air. To make matters worse, one of the passengers on that ill-fated flight expired.

JetBlue Airways Corporation also featured in the headlines by virtue of its bullish view on first-quarter unit revenues. The company was in the news due to labor-related issues as well. Flight attendants at this low-cost carrier voted in favor of joining the Transport Workers Union. By doing so, they have become the second labor group to be unionized at JetBlue. In 2014, the carrier’s pilots joined the Air Line Pilots Association.

On the price front, the NYSE ARCA Airline index increased 1.1% to $113.60 over the past five trading days.

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Apr 11, 2018).

Recap of the Past Week’s Most Important Stories

1. Delta’s first-quarter earnings (excluding 3 cents from non-recurring items) of 74 cents per share surpassed the Zacks Consensus Estimate by a penny. However, the bottom line contracted 3.9% on a year-over-year basis. High fuel costs led to the year-over-year decline. The winter storms, which led to multiple flight cancellations, have also hurt results in the reported quarter. Operating revenues came in at $9,968 million, outpacing the Zacks Consensus Estimate of $9,881.2 million. The top line increased 8.9% from the year-ago figure. Strong demand for air travel boosted revenues (Read more: Delta Q1 Earnings Top Estimates, Down Y/Y on High Costs).

Delta carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. United Continental’s earnings (excluding 2 cents from non-recurring items) of 50 cents surpassed the Zacks Consensus Estimate of 49 cents. Moreover, the bottom line climbed 25% year over year owing to higher revenues.

Operating revenues of $9,032 million in the first quarter were also ahead of the Zacks Consensus Estimate of $9,012.5 million. The top line increased 7.3% on a year-over-year basis. The company reported a 2.7% year-over-year rise in consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) to 13.15 cents. Yield increased 1.7% too.

Total operating expenses were up 8% year over year to $8,756 million. Consolidated unit cost or cost per available seat mile (CASM) — excluding fuel, third-party business expenses, profit sharing and special charges — nudged up 0.6% year over year. Average fuel price per gallon (on a consolidated basis) escalated 23.4% year over year to $2.11.

The company anticipates capacity to increase between 4% and 5% for the second quarter. Pre-tax margin is estimated to be between 9% and 11%. Passenger unit revenues are expected to increase 1-3% year over year in the same period.

For 2018, capacity is estimated to increase between 4.5% and 5.5%. Previously, the metric was projected to expand in the range of 4-6%. Meanwhile, CASM — excluding third-party business expenses, fuel & profit sharing — is expected in the range of down 1% to flat year over year. Effective income tax rate is estimated to be in the band of 21-22% in the year. The company also expects adjusted earnings per share to lie in the band of $7-$8. Earlier the metric was anticipated to lie between $6.50 and $8.50.

3 At JetBlue, March traffic — measured in revenue passenger miles (RPMs) — improved 7.3% year over year to 4.38 billion. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) also expanded 3.3% to 4.92 billion. With traffic growth outpacing capacity expansion, load factor (percentage of seats filled with passengers) registered a rise of 330 basis points year over year to 89%. JetBlue now expects first-quarter RASM to increase approximately 6.1% year over year (previous guidance anticipated the metric to grow in the 3.5-5.5% band) (Read more: Strong Demand Aids JetBlue's March Traffic, Bullish Q1 View).

4. CBS News' report, "60 Minutes", painted a gloomy picture of the Allegiant, alleging that it was facing a number of safety-related issues. The report further stated that the poor safety standard was responsible for around 100 serious mechanical incidents in the January 2016-October 2017 time frame (Read more: What's Behind the 3.1% Dip in Allegiant Travel Stock?).

5. According to data released by the Bureau of Labor Statistics, average airfares (adjusted) in March increased 0.6% on a month-on-month basis. Notably, this was the second successive month of air fare increase. However, unadjusted airfares declined 5.7% in the same month on a year-over-year basis. In fact, the August reading followed the 4.6% year-over-year decline in July.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339



Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
Allegiant Travel Company (ALGT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research