Hawaiian Holdings HA is performing impressively at the moment. Also, we are optimistic on the company’s prospects and believe that the time is right for investors to add the stock to their portfolio.
Let’s take a look into the factors that make this Zacks Rank #2 (Buy) stock a compelling choice for investors right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
An Outperformer: Hawaiian Holdings has outperformed its industry on a year-to-date basis. The stock has gained 14.7% compared with the industry’s 12.1% growth.
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Earnings Estimates Moving North: Annual estimates for Hawaiian Holdings have been north bound over the past 60 days, reflecting analysts’ confidence in the stock. Over this period, the Zacks Consensus Estimate for current-year earnings climbed 12.3% to $4.47. For 2020, the same moved up 7.3% to $3.82 over the same time frame.
Given the wealth of information at their disposal, it is in the best interest of investors to be guided by broker advice and the direction of their estimate revisions. This is because the direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Impressive Earnings Surprise History: Hawaiian Holdings has an impressive earnings surprise history. The company has outpaced the Zacks Consensus Estimate in each of the past four quarters. The average earnings beat is 5.9%.
Tailwinds: Hawaiian Holdings, like most other airline players including the likes of Delta Air Lines DAL, Alaska Air Group ALK and JetBlue Airways JBLU, is being aided by low fuel costs. Evidently, economic fuel cost per gallon declined 5.1% in third-quarter 2019 to $2.04. As fuel expenses comprise a major chunk of airline expenditure, a decline in costs is likely to boost earnings. Furthermore, the company’s outlook for non-fuel unit costs for the December quarter is encouraging. The metric is expected to increase merely in the 0.5-3.5% range. The projection is highly favorable compared with the 4.9% increase in the metric during the September quarter.
We are also impressed by the company’s efforts to reward its shareholders through dividends and buybacks. Hawaiian Holdings’ fleet-modernization efforts are commendable as well. As part of such efforts, the company took delivery of two A321neos in the September quarter. Evidently, the number of such jets in its fleet increased to 15. Efforts to expand internationally also raise optimism.
Bullish Industry Rank: The industry, to which Hawaiian Holdings belongs, currently has a Zacks Industry Rank of 83 out of 250 plus groups (top 33%). Studies have shown that 50% of a stock's price movement is directly related to the performance of the industry group that it is in.
In fact, an average stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Style Scores: In addition to a top Zacks Rank and favorable industry rank, the stock has a Value Score and VGM Score of A. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select the winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.
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