U.S. Markets closed

The Zacks Analyst Blog Highlights: Hawaiian Holdings, Delta Air Lines, Allegiant Travel, JetBlue Airways and Alaska Air Group

Zacks Equity Research

For Immediate Release

Chicago, IL – January 11, 2017, 2016 – 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 Hawaiian Holdings, Inc. (NASDAQ: HA – Free Report ), Delta Air Lines (NYSE: DAL – Free Report ), Allegiant Travel Company (NASDAQ: ALGT – Free Report ), JetBlue Airways (NASDAQ: JBLU – Free Report ) and Alaska Air Group (NYSE: ALK – Free Report ).

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

Here are highlights from Tuesday’s Analyst Blog:

5 Airline Stocks Likely to Beat Q4 Earnings Estimates

Airline stocks seem to be back in favor once again. The stocks, which had been struggling for the most of 2016, ended the year on a triumphant note. This can be made out from the fact that the NYSE ARCA Airline Index has gained almost 19% in the last three months.

Moreover, the Zacks categorized Transportation-Airline division gained 19.43% in the final quarter of 2016, comfortably outperforming the S&P 500 Index that grew just 1.81% during the period.

The improvement in the Zacks industry rank of the Transportation-Airline division to 27 (out of more than 260 groups) from the 200+ rank carried a few months ago also bears testimony to the turnaround in fortunes for this key sector (one of the 16 Zacks sectors).

Factors at Play

One of the key factors to have plagued airlines for most of 2016 was declining PRASM (passenger revenue per available seat mile: a measure of sales relative to capacity for a carrier). However, unit revenue woes seem to be mitigating, courtesy of bullish forecasts pertaining to this key metric for the final quarter of 2016.

For instance, Delta’s passenger unit revenue was flat year over year for December. The metric is expected to decline 2.5–3% in the fourth quarter, which is a much more favorable reading than the earlier projection of a decline of 3% to 5%.

American Airlines Group (AAL) now expects total revenue per available seat mile (TRASM) for the fourth quarter in the band of decline of 1% to an increase of 1%. The view represents a marked improvement from the earlier guidance, when the metric was expected to decline in the band of 0.5–2.5%.

JetBlue expects RASM to decline in the band of 1% to 2% in the fourth quarter. The forecast is favorable when compared with the 3.5% RASM decline witnessed in the third quarter.

Apart from bullish unit revenue-related updates, developments like the completion of the acquisition of Virgin America by Alaska Air and the resumption of commercial scheduled flights to Havana – a favorite tourist destination – after more than five decades have resulted in the sector participants flying high.

The fact that things are looking up for airline stocks is further highlighted by the fact that Warren Buffett – one of the most revered investors of all times – put his bets on four airline heavyweights, namely Delta Air Lines, American Airlines Group, Southwest Airlines Co. (LUV) and United Continental Holdings Inc. (UAL). The move is all the more significant as Buffett had historically been against investing in this sector. In fact, his last investment in airlines was in the 1980s.

Given the favorable backdrop, it is very much likely that airline stocks will report impressive results in the fourth-quarter 2016 earnings season. Moreover, an earnings beat might not be too difficult for carriers in the quarter due to reduced expectations.

Naturally, it is a prudent idea to add such stocks to one’s portfolio for handsome returns.

How to Make the Right Choice?

With quite a few companies in the airline space, the task of selecting the right stocks is by no means an easy one. The process is akin to searching for ‘a needle in a haystack’ unless one is aware of an appropriate method to make the right choice.

One way to narrow down the list of choices is by looking at stocks with a favorable Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) alongside a positive Earnings ESP .

Earnings ESP is our proprietary methodology to determine which stocks have the best chance to surprise in their next earnings announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%. An earnings beat boosts investor confidence in the stock, which is reflected in its rapid price appreciation. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter .

5 Attractive Picks

With the aid of the above methodology, we have zeroed in on five airline stocks that are likely to report better-than-expected earnings per share in the fourth quarter. We believe that these stocks could turn out to be great additions to your portfolio and are worth a look.

Hawaiian Holdings, Inc. (NASDAQ:HA – Free Report ), which engages in the scheduled air transportation of passengers and cargo, is our first choice in the list of likely outperformers. The company is expected to release fourth-quarter results on Jan 24. We expect this Honolulu, HI-based carrier to surpass expectations as it has an Earnings ESP of +5.47% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here . The Zacks Consensus Estimate for fourth quarter has risen 15.3% over the last three months to $1.28 per share.

Our next choice is Delta Air Lines (NYSE: DAL – Free Report ), which will kick-start the fourth-quarter earnings season for airlines on Jan 12. The Atlanta, GA-based carrier is expected to outperform with respect to the bottom line as it has an Earnings ESP of +1.24% and a Zacks Rank #3. In fact, the carrier has an impressive track record with respect to earnings, having outpaced the Zacks Consensus Estimate in three of the last four quarters.

Las Vegas, NV-based Allegiant Travel Company (NASDAQ: ALGT – Free Report ) also features in our current list of favorites owing its Zacks Rank #3 and an Earnings ESP of +0.86%. The Zacks Consensus Estimate for the fourth quarter rose by 2 cents to $2.32 per share over the last month.

The parent company of Allegiant Airlines, which focuses on linking travelers in small cities to world-class leisure destinations, is expected to reveal its fourth-quarter results on Jan 31.

Based in Long Island City, NY, JetBlue Airways (NASDAQ: JBLU – Free Report ) is a low-cost passenger airline that operates primarily on point-to-point routes. The carrier has a Zacks Rank #3 and an Earnings ESP of +4.26%. The Zacks Consensus Estimate for the fourth quarter has increased by 3 cents over the last month to 47 cents per share. The carrier is expected to unveil its quarterly results on Jan 26.

Our final choice is Seattle, WA-based Alaska Air Group (NYSE:ALK – Free Report ). The company carries a Zacks Rank #3 and has an Earnings ESP of +6.2%. The Zacks Consensus Estimate for the fourth quarter has increased by 4 cents over the last month to $1.29 per share. The carrier is expected to unveil its results on Jan 19.

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?

Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>

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 >>.

Get the full Report on HA - FREE

Get the full Report on DAL - FREE

Get the full Report on ALGT - FREE

Get the full Report on JBLU - FREE

Get the full Report on ALK - 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
Hawaiian Holdings, Inc. (HA): Free Stock Analysis Report
Delta Air Lines, Inc. (DAL): Free Stock Analysis Report
Allegiant Travel Company (ALGT): Free Stock Analysis Report
JetBlue Airways Corporation (JBLU): Free Stock Analysis Report
Alaska Air Group, Inc. (ALK): Free Stock Analysis Report
To read this article on Zacks.com click here.