What's in The Offing for Alaska Air (ALK) in Q1 Earnings?
Alaska Air Group, Inc. ALK is scheduled to release first-quarter 2021 results on Apr 22.
The Zacks Consensus Estimate for first-quarter bottom line has widened from a loss of $2.37 per share to a loss of $3.78 per share in the past 90 days. The company has an average record with respect to earnings per share, having outpaced the Zacks Consensus Estimate in two of the last four quarters (missing the same in the remaining two). It has a trailing four-quarter earnings surprise of 7.6%, on average.
Against this backdrop, let’s discuss the factors that might have impacted the company’s March-quarter performance.
Alaska Air Group, Inc. Price and EPS Surprise
Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. Quote
Akin to the fourth quarter 2020, Alaska Air’s first-quarter performance is likely to have been dented by coronavirus-induced weak passenger revenues due to low air-travel demand. The Zacks Consensus Estimate for passenger revenues indicates a 58.7% decline from the number reported in the year-ago quarter.
In order to mitigate the low-demand scenario, the carrier is trimming capacity. The Zacks Consensus Estimate for available seat miles (a measure of capacity) indicates a 29.1% decline from the number reported in the year-ago quarter. The Zacks Consensus Estimate for traffic (measured in revenue passenger miles) suggests a plunge of 54.6% from the prior-year quarter’s reported figure.
With traffic declining faster than capacity cuts, load factor (% of seats filled by passengers) is likely to have tanked in the first quarter. The Zacks Consensus Estimate for Alaska Air’s first-quarter 2021 passenger load factor stands at a dismal 44.6%, which suggest a decline from 70% reported in first-quarter 2020.
However, lower fuel prices are expected to have boosted Alaska Air’s bottom line. Notably, the Zacks Consensus Estimate for economic fuel price per gallon suggests a 16.6% drop from the figure reported in the March quarter of 2020.
What the Zacks Model Unveils
Our proven model does not conclusively predict a bottom-line outperformance for Alaska Air this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: Alaska Air has an Earnings ESP of -0.62% as the Most Accurate Estimate is pegged at a loss of $3.80, lower than the Zacks Consensus Estimate of a loss of $3.78. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Alaska Air carries a Zacks Rank #3, currently.
Highlights of Q4
Alaska Air incurred a loss of $2.55 per share (excluding 92 cents from non-recurring items) in the fourth quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.91. Revenues came in at $808 million, surpassing the Zacks Consensus Estimate of $786.6 million. However, the top line declined 63.7% year over year.
Stocks to Consider
Investors interested in the broader Transportation sector may consider JetBlue Airways Corporation JBLU, Herc Holdings Inc. HRI and Landstar System, Inc. LSTR as these stocks possess the right combination of elements to beat on earnings this reporting cycle.
Landstar has an Earnings ESP of +0.79% and is Zacks #2 Ranked, presently. The company will release first-quarter 2021 results on Apr 21.
Herc Holdings has an Earnings ESP of +18.8% and sports a Zacks Rank of 1, at present. The company will release first-quarter 2021 results on Apr 22.
JetBlue Airways has an Earnings ESP of +3.09 and carries a Zacks Rank #3. The company is set to release first-quarter 2021 earnings numbers on Apr 27.
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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Landstar System, Inc. (LSTR) : Free Stock Analysis Report
Herc Holdings Inc. (HRI) : Free Stock Analysis Report
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