JetBlue Airways (JBLU) Up 3% Since Earnings Report: Can It Continue?

It has been about a month since the last earnings report for JetBlue Airways Corporation (NASDAQ:JBLU) . Shares have added about 3% in the past month, outperforming the market.

Will the recent positive trend continue leading up to its next earnings release, or is JBLU due for a pullback? 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 catalysts.

Recent Earnings

JetBlue's fourth-quarter 2017 earnings per share (excluding $1.76 from non-recurring items) of 32 cents, fell short of the Zacks Consensus Estimate of 34 cents. The bottom line decreased 36% on a year-over-year basis due to high costs.

Operating revenues of $1,756 million matched the Zacks Consensus Estimate. Revenues increased 7% from the year ago figure. Passenger revenues, which accounted for bulk of the top line (89.1%), improved 5.9% in the final quarter of 2017. Other revenues increased 16.9% as well.

Operating Statistics

Capacity, measured in available seat miles, expanded 5.1% year over year. Traffic, measured in revenue passenger miles, grew 3.1% in the reported quarter. Load factor (percentage of seats filled by passengers) declined 160 basis points (bps) year over year to 83.1% as traffic growth was outpaced by capacity expansion.

Yield per passenger mile improved 2.8% year over year to 13.57 cents. Passenger revenue per available seat mile (PRASM: a key measure of unit revenue) inched up 0.8% to 11.28 cents and operating revenue per available seat mile (RASM) increased 1.8% to 12.66 cents.

Expenses

In the fourth quarter, total operating expenses (on a reported basis) increased 16.5% year over year. Average fuel cost per gallon (including fuel taxes) escalated 21.6% to $1.99. Moreover, JetBlue’s operating cost per available seat mile (CASM) was up 10.8% to 11.29 cents in the reported quarter. Excluding fuel, the metric climbed 8.1% to 8.63 cents backed by rise in labor costs.

Balance Sheet

JetBlue exited the year with cash and cash equivalents of $303 million compared with $433 million at the end of 2016. Total debt, at the end of the quarter was $1,199 million than $1,384 million at the end of 2016. Meanwhile, this low-cost carrier is constantly working toward reducing its debt levels.

Outlook

For the first quarter of 2018, the carrier expects capacity to increase between 3.5% and 5.5%. The metric is anticipated to increase in the range of 6.5% to 8.5% for 2018.

Consolidated operating cost per available seat mile, excluding fuel, is expected to grow in the band of 2% to 4% in the first quarter. For the current year, the metric is projected in the range of -1% to +1% (year over year).

Operating revenue per available seat mile (RASM) is anticipated to grow in the 2.5% to 5.5% band in first-quarter 2018.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. While looking back an additional 30 days, we can see even more upward momentum.

JetBlue Airways Corporation Price and Consensus

JetBlue Airways Corporation Price and Consensus | JetBlue Airways Corporation Quote

VGM Scores

Currently, JBLU has a poor Growth Score of F, however its Momentum is doing a bit better with a D. However, the stock was also allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

The stock is suitable solely for value based on our style scores.

Outlook

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