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Can Virgin America (VA) Earnings Pull a Surprise in Q3?

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Virgin America Inc.VA is set to announce third-quarter 2015 financial numbers before the opening bell on Oct 29.

In the last quarter, the company posted a 14.06% surprise. Let's see how things are shaping up for this announcement.

Factors at Play

Virgin America continues to benefit from route expansion, efficient customer service and the launch of ancillary products and services. Moreover, low fuel prices continue to boost profits for the company.

However, the slump in fuel prices is likely to lead to a price war among the U.S. carriers, thereby exerting pressure on low-cost airline operators like Virgin America and Spirit Airlines. Moreover, the U.S. airline industry is expanding seat capacity which will lead to lower unit revenue as well as load factor. Thus, to fill up seats, most carriers are offering discounted air fares, thereby leading to stiff competition which in turn will impact Virgin America's revenues.

Earnings Whispers

Our proven model does not conclusively show that Virgin America is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or at least 3 for this to happen. That is not the case here, as you will see below:

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are poised at $1.57. Hence, the ESP is 0.00%.

Zacks Rank: Nokia carries a Zacks Rank #1 (Strong Buy) which increases the predictive power of ESP. However, the company's 0.00% ESP makes surprise prediction difficult.

Please note that Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

Ryanair Holdings plc RYAAY has an earnings ESP of +8.41% and a Zacks Rank #1.

Canadian National Railway Company CNI has an earnings ESP of +1.14% and a Zacks Rank #3 (Hold).

SkyWest Inc. SKYW has an earnings ESP of +4.55% and a Zacks Rank #1.

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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

VIRGIN AMERICA (VA): Free Stock Analysis Report

RYANAIR HLDGS (RYAAY): Free Stock Analysis Report

CDN NATL RY CO (CNI): Free Stock Analysis Report

SKYWEST INC (SKYW): Free Stock Analysis 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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