JetBlue Airways Corporation
) to beat expectations when it reports its second-quarter 2014
results before the market opens on Jul 24, 2014.
Why a Likely Positive Surprise?
Our proven model shows that JetBlue is likely to beat earnings this
quarter because it has the right combination of two key
The Earnings ESP, which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, stands at
+5.26. This is because the Most Accurate estimate is poised at 20
cents whereas the Zacks Consensus Estimate is pegged at 19 cents. A
favorable Zacks ESP serves as a meaningful and leading indicator of
a likely positive earnings surprise.
JetBlue currently has a Zacks Rank #2 (Buy). Note that the stocks
with Zacks Rank #1, 2 or 3 have a significantly higher chance of
beating earnings. However, the Sell-rated stocks (#4 and 5) should
never be considered going into an earnings announcement.
The combination of JetBlue's Zacks Rank #2 and +5.26% ESP makes us
confident of a positive earnings beat.
What is Driving the Better-Than-Expected Earnings?
JetBlue's strong branding and product differentiation allows it to
offer its customers a unique flying experience. Meanwhile,
management continues to focus on achieving long-term sustainable
growth, as JetBlue is the only non-unionized airline in the
industry with the flexibility to manage its cost structure.
JetBlue is making continued progress in expanding its product and
service offerings on board and on the ground to boost ancillary
revenues and enhance ticket pricing flexibility. With a low cost
structure, the company continues to expand its network footprint in
major growth regions like Boston, Fort Lauderdale, the Caribbean
and Latin America.
Going forward, JetBlue expects to add new routes from Boston and
aims to operate 150 flights per day from the area. Short haul
routes from Boston continue to reap significant benefits on efforts
to reduce seasonality of network and improved corporate travel
demand. The Latin America and Caribbean markets account for almost
one-third of the company's total network and serves 24 locations in
JetBlue has recently won 40 new take-off and landing slots at
Reagan Washington National Airport (DCA) including the 16 that it
leased from American Airlines. Further, the company has taken
several steps to maximize the cost efficiency of its fleet that
will lower maintenance expenses to a certain extent. The company is
either disposing its old aircraft or replacing the old spare
engines with new ones.
Other Stocks to Consider
Other companies you may consider on the basis of our model, which
have the right combination of elements to post an earnings beat
this quarter are as follows:
Southwest Airlines Co.
) has an earnings ESP of +3.39% and a Zacks Rank #1 (Strong
American Airlines Group Inc.
) has an earnings ESP of +1.56% and a Zacks Rank #1.
Alaska Air Group, Inc.
) has an earnings ESP of +0.92% and a Zacks Rank #1.
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
JETBLUE AIRWAYS (JBLU): Free Stock Analysis
AMER AIRLINES (AAL): Free Stock Analysis Report
SOUTHWEST AIR (LUV): Free Stock Analysis Report
ALASKA AIR GRP (ALK): Free Stock Analysis
To read this article on Zacks.com click here.