Five Airline Stocks Likely To Beat Q4 Earnings Estimates

Its earnings time again! This is the time when the investor community is busy comparing estimates with actual outcomes. Prior to the releases, investors would look to add stocks that have the potential to surpass earnings expectations in the quarter. This is because an earnings beat positively impacts the stock price. Given this backdrop, the obvious question is how to find potential winners?

Through this write-up, we aim to help investors find airline stocks that are likely to report better-than-expected earnings per share in the fourth quarter of 2017. Notably, airline stocks are an integral part of the Zacks Transportation sector (one of the 16 Zacks sectors).

The fourth-quarter earnings season will be kicked off by Delta Air Lines (DAL – Free Report) on Jan 11. The company carries a Zacks Rank #3 (Hold). 

The overall sentiment pertaining to airlines is quite positive ahead of the earnings season. This is because airline stocks seem to be back in favor after struggling for most of 2017 due to multiple headwinds like the back-to-back hurricanes and unit revenue issues, among others.

Contrasting Price Performances Signal Improvement

Post hurricanes, things are looking up for airline stocks. This is evident when comparing the price performance of the Zacks Airline industry with the S&P 500 Index in the first nine months and the last three months of 2017.

While the industry gained only 1.8%, the S&P 500 index rallied 12.6% in the first nine months.  However, the industry handily outperformed the S&P 500 index in the final quarter of 2017, rallying 12.9% compared with the S&P’s gain of 6%.

Why the Bullish Scenario

The improving scenario can be made out from the bullish fourth-quarter unit revenue forecasts from key sector players like Delta and Hawaiian Holdings (HA). Moreover, the likes of United Continental Holdings (UAL – Free Report) and JetBlue Airways (JBLU – Free Report) announced new share buyback programs during the same quarter. These shareholder-friendly initiatives bear testimony to the solid financial health of carriers.