It's nearly impossible to discuss any positive news about the
airline industry without inadvertently invoking flight-related
metaphors. Nevertheless, recent earnings reports have inspired
quite a few well-deserved nods of accomplishment.
The Airline Transportation sector of the Zacks Industry Rank list
gained 84 positions last week; with several new earnings reports
beating expectations. This is a large category of 25 companies,
which now holds a rank of #92 out of 260 sectors. This is a boost
of +84 positions over just one week. With positive earnings
revisions outpacing negative 44 to 13, airlines are now averaging
positive Earnings per Share (EPS) surprises of +27%.
There are a number of factors affecting this turnaround: reduced
labor costs, increased consumer spending (dollar per mile), fewer
flight cancellations, increased carrying capacity and the simple
fact that people are just flying more this year compared to last.
Combined, this means good news for an industry which has hurt more
than most over the past decade.
Two of the carriers which stood out this week are turning these
trends into revenue. With upgrades to a Zacks Rank #1 (Strong Buy)
from a "Buy" rating or to a Zacks Rank #2, this may indicate a
positive future performance for these stocks in response to further
positive earnings estimate revisions. Paying attention to
sector performance, which affects not only individual businesses
but the industry as a whole, is beneficial in developing a good
This industry seems to have departed its most turbulent years, with
the tailwind of economic turnaround giving investors a first-class
ticket to soaring profits. Just beware the overhead baggage of
rising fuel costs which may delay earnings and lead investors to
find the nearest exit row. Metaphorically speaking, of
SAVE was upgraded to a Zacks Rank #2 (Buy) last week from #3
(Neutral). Its next expected earnings report is on October
Spirit Airlines Inc. operates an airline based in Fort Lauderdale
providing travel opportunity principally to and from South Florida,
the Caribbean and Latin America. Spirit Airlines Inc. is based in
Miramar, Florida. It is looking for +14% annual sales growth and
+19% annual earnings growth next year.
This airline has strung together an impressive series of either
meeting earnings expectations, or answering with a beat. It has had
an earnings surprise of up +15% in the last three quarters.
According to the most accurate analyst, the coming quarterly report
on October 30 looks to offer a +10% beat.
RJET is a Zacks Rank #1 (Strong Buy). It moved up from a
Zacks Rank #2 (Buy) last week. This company reports quarterly
earnings on October 30, 2013.
Republic Airways Holdings, based in Indianapolis, Indiana, is an
airline holding company that owns Chautauqua Airlines, Frontier
Airlines, Republic Airlines and Shuttle America flights operated
under partner brands, including American Eagle, Delta Connection,
United Express and US Airways Express.
The airline currently employs approximately 10,000 aviation
professionals. Republic Airways carried +7% more passengers in
September than in the same period in 2012. RJET's most recent
earnings surprise was +7%.
REPUBLIC AIRWAY (RJET): Free Stock Analysis
SPIRIT AIRLINES (SAVE): Free Stock Analysis
SONORA RES CP (SURE): Get Free Report
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