Will Hawaiian Holdings (HA) Beat Q3 Earnings Estimates?

Hawaiian Holdings Inc., (NASDAQ:HA) the parent company of Hawaiian Airlines, is scheduled to report third-quarter 2016 results on Oct 18, after the market closes.

Last quarter, the company had recorded a positive earnings surprise of 6.14%. Moreover, Hawaiian Holdings beat estimates in each of the last four quarters with the average earnings surprise at 5.30%. Let’s see how things are shaping up for this announcement.

Factors at Play this Quarter

Hawaiian Airlines posted good traffic results for September as well as the third quarter. The company’s load factor too increased in the quarter. In addition, the company revised the third-quarter guidance and now expects revenue per available seat mile (RASM) at the higher end of the initial projection. RASM is now expected to increase by 0.5–1.5% over the 2015 level. The previous guidance was in the range of a 1% decline to 2% increase. Cost per seat mile (CASM) is expected to grow in the range of 3.0–4.0% instead of 2.0–5.0%.

However, the company has been facing stiff competition from peers like American Airlines Group Inc. (NASDAQ:AAL) and Delta Air Lines Inc. (NYSE:DAL) . Another cause of concern is the volatility in fuel prices which is a major expense for airlines.

Earnings Whispers

Our proven model shows that Hawaiian Holdings likely is to beat expectations this quarter because it has the right combination of two key ingredients.

Zacks Rank: Hawaiian Holdings carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings.

Zacks ESP: The company has an Earnings ESP of +1.65%. This is because the Most Accurate estimate stands at $1.85 while Zacks Consensus Estimate is pegged at $1.82. The combination of Hawaiian Holdings’ Zacks Rank #3 and +1.65% Earnings ESP makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Please note that we caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

A Stock to Consider

Here is a stock you may want to consider as our model shows it has the right combination of elements to post an earnings beat this quarter.

Student Transportation Inc. (TO:STB) has an Earnings ESP of over +11.11% and a Zacks Rank #2. The company is expected to report third-quarter earnings on Nov 3.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>