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Airline Stocks Q4 Earnings Roster for Jan 24: LUV, AAL & ALK

The fourth-quarter earnings season kicked off in the airline industry with bigwigs like Delta Air Lines DAL and United Continental Holdings UAL reporting earnings numbers on Jan 15. While Delta delivered better-than-expected earnings but lower-than-expected revenues, United Continental surpassed on both counts.

Despite its top-line miss in the quarterly results, Delta performed impressively with respect to passenger revenues and unit revenues. Meanwhile, United Continental provided an encouraging guidance for the first quarter of 2019 and the full year besides generating remarkable Q4 stats.

With a major chunk of airline companies yet to release fourth-quarter financial figures and in the wake of United Continental's breakthrough show this reporting cycle, speculations are rife on other industry players' performance. Notably, the Chicago, IL-based carrier's earnings report not only drove its own shares but also handsomely benefited fellow players like American Airlines AAL , SkyWest SKYW , JetBlue Airways JBLU and Alaska Air Group ALK .

What's in Store for Q4?

Although it is difficult to accurately predict whether the other industry participants will perform as impressively as United Continental, there are certain tailwinds that hold immense promise for the upcoming quarterly results.

Demand for air travel has been ever-increasing on the back of a thriving economy. This is a major catalyst for driving passenger revenues. With passenger revenues accounting for a bulk of the top line, improvement in this key revenue generating segment is likely to lift the top line in turn.

Additionally, the airline companies have been making relentless efforts to cut down non-fuel unit costs in order to streamline operations. This measure is expected to aid bottom-line growth.

It is a well-documented fact that oil prices are a key input cost for any airline company. Thus, low oil prices are a boon in the sense that reduced operating expenses could enhance the bottom line. In this regard, it is worth noting that oil prices declined nearly 40% in the fourth-quarter (October-December). Given that oil prices have been trending high since the beginning of 2018, this sharp drop will certainly benefit the impending quarterly results when being compared on a sequential basis. However, on a year-over-year basis, most companies' fourth-quarter fuel price estimate remains at a pretty high level.

Given this backdrop, investors interested in the airline space will keenly await fourth-quarter reports from leading players, namely Southwest Airlines LUV , American Airlines and Alaska Air Group on Jan 24.

Our quantitative model shows that a company needs the right combination of the following two key ingredients - a positive Earnings ESP and a Zacks Rank #3 (Hold) or better - to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Southwest Airlines is a passenger carrier, providing scheduled air transportation in the United States. The company is likely to beat on earnings in the fourth quarter as it has a Zacks Rank #2 (Buy) and an Earnings ESP of +3.40%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

In fact, our model predicted an earnings beat for the company when we issued our fourth-quarter earnings preview article. Back then, the stock had the same Earnings ESP but a Zacks Rank of 3.

Southwest Airlines Co. Price and EPS Surprise

Southwest Airlines Co. Price and EPS Surprise | Southwest Airlines Co. Quote

American Airlines is a major airline headquartered in Fort Worth, TX. The company is not likely to surpass on fourth-quarter earnings despite carrying a Zacks Rank of 2 as it has an Earnings ESP of -2.56%. (Read more: Can American Airlines Beat High Costs in Q4 Earnings? )

American Airlines Group Inc. Price and EPS Surprise

American Airlines Group Inc. Price and EPS Surprise | American Airlines Group Inc. Quote

Alaska Air Group is an airline company offering passenger and cargo services across 100 cities in North America. The stock has an Earnings ESP of +2.23% and is a Zacks #2 Ranked player, which buoy investors' hopes on the company's likely earnings surprise this season. (Read more: Will Passenger Revenues Aid Alaska Air's Q4 Earnings? )

Alaska Air Group, Inc. Price and EPS Surprise

Alaska Air Group, Inc. Price and EPS Surprise | Alaska Air Group, Inc. Quote

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 - 2017, they soared far above the market's +126.3%, reaching +181.9%.

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Alaska Air Group, Inc. (ALK): Free Stock Analysis Report

Southwest Airlines Co. (LUV): Free Stock Analysis Report

Delta Air Lines, Inc. (DAL): Get Free Report

United Continental Holdings, Inc. (UAL): Free Stock Analysis Report

SkyWest, Inc. (SKYW): Free Stock Analysis Report

American Airlines Group Inc. (AAL): Free Stock Analysis Report

JetBlue Airways Corporation (JBLU): Get Free Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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