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Why Is Hawaiian Holdings (HA) Down 0.8% Since Last Earnings Report?

A month has gone by since the last earnings report for Hawaiian Holdings (HA). Shares have lost about 0.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Hawaiian Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Narrower-Than-Expected Loss in Q2

Hawaiian Holdings’ third-quarter 2022 loss (excluding 3 cents from non-recurring items) of 15 cents per share was narrower than the Zacks Consensus Estimate of a loss of 19 cents. HA reported a loss of 95 cents in the year-ago quarter. Moreover, quarterly revenues of $741.2 million surged 45.6% year over year but missed the Zacks Consensus Estimate of $750.8 million.

Passenger revenues (contributing 89.5% to the top line) surged 46% year over year to $663.1 million. Scheduled airline traffic, measured in revenue passenger miles, rose 29.3% year over year to 4,113,172 million in the quarter under review. Scheduled capacity (measured in available seat miles) increased 18.3% to 4,957,011 million. Scheduled load factor (percentage of seats filled by passengers) improved 7.1 percentage points to 83% in the reported quarter as traffic surge outweighed capacity expansion. Passenger revenue per ASM (PRASM) rose 23.4% to 13.38 cents. Yield (scheduled) increased 13%.

Operating revenue per available seat mile (RASM: a key measure of unit revenues) for total operations in the quarter rose 24.1% year over year to 14.93 cents. Average fuel cost per gallon (economic) increased 109% to $3.54 in the third quarter. Gallons of jet fuel consumed increased 21.4% in the September quarter with more flights in operation.

As of Sep 30, 2022, Hawaiian Holdings’ unrestricted cash, cash equivalents and short-term investments totaled $1.4 billion. Outstanding debt and finance lease obligations were $1.7 billion.

For the fourth quarter of 2022, capacity (or ASMs) is projected to decline 4-7% from the fourth-quarter 2019 levels.  Total revenues are anticipated to increase 1.5-5.5% from the fourth-quarter 2019 levels. Costs per ASM (excluding fuel & non-recurring items) are expected to rise 13-16% from the fourth-quarter 2019 numbers.  Gallons of jet fuel consumed are expected to fall 5.5-8.5% from the fourth-quarter 2019 actuals. Adjusted EBITDA is expected between minus $5 and plus $35 million. Fuel price per gallon is expected to be $3.49.

For 2022, gallons of jet fuel consumed are expected to fall 10-13% from the 2019 actuals. Fuel price per gallon is expected to be $3.47 for the full year. The effective tax rate is expected in the 18-19% range. Capital expenditure is expected between $120 million and $135 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -171.11% due to these changes.

VGM Scores

At this time, Hawaiian Holdings has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Hawaiian Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Hawaiian Holdings belongs to the Zacks Transportation - Airline industry. Another stock from the same industry, Delta Air Lines (DAL), has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Delta reported revenues of $13.98 billion in the last reported quarter, representing a year-over-year change of +52.7%. EPS of $1.51 for the same period compares with $0.30 a year ago.

For the current quarter, Delta is expected to post earnings of $1.13 per share, indicating a change of +413.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Delta. Also, the stock has a VGM Score of A.

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