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Hawaiian Holdings (HA) Q2 Earnings: A Beat in the Offing?

Hawaiian Holdings, Inc.HA is scheduled to release second-quarter 2018 earnings numbers on Jul 24, after the closing bell.

In the last reported quarter, the company's earnings per share (on an adjusted basis) of $1.09 outpaced the Zacks Consensus Estimate of 82 cents. Quarterly revenues of $665.4 million were also ahead of the consensus mark of $652.4 million.

Although plagued by high costs and other headwinds, an earnings beat doesn't look very difficult for Hawaiian Holdings in the second quarter. The Zacks Consensus Estimate is pretty conservative at $1.26, after a number of downward revisions over the last couple of months.

Our quantitative model too points at an earnings beat in the soon-to-be-reported quarter. Here's why:

Hawaiian Holdings has the right combination of the two key ingredients - a positive Earnings ESP and a Zacks Rank #3 (Hold) or better - which increases the odds of an earnings surprise.

Zacks ESP: Hawaiian Holdings has an Earnings ESP of +5.56% as the Most Accurate estimate is $1.33 while the Zacks Consensus Estimate is pegged 7 cents lower. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Hawaiian Holdings carries a Zacks Rank #3. Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. You can see the complete list of today's Zacks #1 Rank stocks here.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Hawaiian Holdings' Zacks Rank #3 and a positive ESP makes us reasonably confident of an earnings beat.

Hawaiian Holdings, Inc. Price and EPS Surprise

Hawaiian Holdings, Inc. Price and EPS Surprise | Hawaiian Holdings, Inc. Quote

Factors Likely at Play

Similar to the last reported quarter, high fuel costs are likely to act as the key dampener to Hawaiian Holdings' earnings in the second quarter. We note that oil prices increased 14% in the April-June period. The Zacks Consensus Estimate for second-quarter average fuel price (mainline: net of hedging gains) stands at $2.10 per gallon, much higher than the $1.59 reported in the second quarter of 2017.

Hawaiian Holdings expects a rise of 6-7% in the gallons of jet fuel consumed in the soon-to-be-reported quarter. Economic fuel cost per gallon is projected between $2.05 and $2.10. Labor costs are also expected to hurt the bottom line.

Meanwhile, increase in volcanic activity on the Big Island region resulted in a decline in bookings and is likely to hurt second-quarter unit revenues. The carrier anticipates operating revenue per available seat mile (RASM) in the range of down 0.5% to up 1.5% (change on a year-over-year basis). The Zacks Consensus Estimate for RASM is pegged at 14.22 cents, lower than 14.26 cents a year ago.

However, we are impressed by the carrier's efforts to modernize its fleet. On the second-quarter conference call, we expect a detailed commentary on this issue.

Key Picks

Investors interested in the broader Transportation sector may consider stocks like United Parcel Service, Inc. UPS , Expeditors International of Washington, Inc. EXPD and Norfolk Southern Corporation NSC as these possess the right combination of elements to deliver an earnings beat this reporting cycle.

UPS has an Earnings ESP of +0.54% and a Zacks Rank of 3. The company will report second-quarter earnings on Jul 25.

Expeditors has an Earnings ESP of +1.54% and a Zacks Rank #2. The company will report second-quarter earnings on Aug 7.

Norfolk Southern is also a #2 Ranked stock and has an Earnings ESP of +0.28%. The company will announce second-quarter financial numbers on Jul 25.

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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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