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Alaska Air Shares Gain on Bullish Third-Quarter EPS View
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Shares of Alaska Air Group, Inc. (ALK - Free Report) have improved in pre-market trading on Sept. 12, 2024. The upside was owing to the improved third-quarter 2024 guidance revealed by the company.
ALK raises its third-quarter 2024 adjusted earnings per share guidance to the range of $2.15-$2.25 from the previously guided range of $1.40 to $1.60. Improved revenue and fuel cost outlook have led to the encouraging earnings per share (EPS) forecast.
Alaska Air has witnessed upbeat air travel demand during the summer season, offering hassle-free service for guests with a 99.3% completion rate quarter-to-date. Apart from the air travel demand strength, additional revenues in July related to CrowdStrike disruptions across the industry and stronger performance in August and September also contributed to ALK’s top-line growth.
We believe initiatives, such as the introduction of new routes and increasing the number of daily flights in its network that fly to popular destinations taken up by ALK to meet the busy summer season demand, have paid off.
As a result, Alaska Air now expects its third-quarter 2024 revenue per available seat mile (a key measure of unit revenues) to be up 2% on a year-over-year basis, an improvement from the previous forecast of flat to positive.
ALK continues to expect third-quarter capacity (measured in available seat miles) to increase in the range of 2-3% on a year-over-year basis.
Declining fuel expenses (owing to the moderating crude oil and West Coast refining margins) mark another major positive. ALK now anticipates third-quarter 2024 economic fuel cost per gallon in the range of $2.60-$2.70 (prior view: $2.85-$2.95). Lower fuel costs should boost the company’s bottom line, as fuel expenses represent a key input cost for any transportation player.
Consolidated operating costs per available seat mile (excluding fuel and special items) are still expected to increase in the high single digits.
Given this encouraging outlook, we are keenly waiting for the company’s upcoming third-quarter earnings release.
JBLU now anticipates its third-quarter revenues to be down 2.5% to up 1% on a year-over-year basis. This marks an improvement from the previous guidance of a decline in the range of 1.5-5.5%. JBLU now expects its third-quarter capacity (measured in available seat miles) to decline in the 3-5% range, which marks an improvement over the prior forecast to decline in the 3-6% band.
JetBlue now anticipates third-quarter 2024 average fuel cost per gallon in the range of $2.70 - $2.80 (prior view: $2.82 - $2.97). JBLU now anticipates consolidated operating costs per available seat mile (excluding fuel and special items) to increase in the range of 5-7%, down from the prior expectation of a 6-8% increase.
Canadian National Railway Company(CNI - Free Report) adjusted the outlook for the current year following labor disruptions that threatened to weaken the economy of Canada. The railroad operator now expects adjusted EPS to grow in the low single-digit range compared with its previous expectation of mid to high single-digit growth. Capital expenditures (net of amounts reimbursed by customers) for the current year are still expected to be C$3.5 billion. The railroad operator now expects adjusted return on invested capital for the current year to be in the 13-15% range compared with the previous expectation of roughly 15%.
Following the railroad operator‘s decision to cut the 2024 EPS growth outlook and the weak economic environment, CNI withdrew its previously provided guidance for the 2024-2026 time period. CNI targets compounded annual adjusted EPS growth in the high single-digit range.
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Alaska Air Shares Gain on Bullish Third-Quarter EPS View
Shares of Alaska Air Group, Inc. (ALK - Free Report) have improved in pre-market trading on Sept. 12, 2024. The upside was owing to the improved third-quarter 2024 guidance revealed by the company.
ALK raises its third-quarter 2024 adjusted earnings per share guidance to the range of $2.15-$2.25 from the previously guided range of $1.40 to $1.60. Improved revenue and fuel cost outlook have led to the encouraging earnings per share (EPS) forecast.
Alaska Air has witnessed upbeat air travel demand during the summer season, offering hassle-free service for guests with a 99.3% completion rate quarter-to-date. Apart from the air travel demand strength, additional revenues in July related to CrowdStrike disruptions across the industry and stronger performance in August and September also contributed to ALK’s top-line growth.
We believe initiatives, such as the introduction of new routes and increasing the number of daily flights in its network that fly to popular destinations taken up by ALK to meet the busy summer season demand, have paid off.
As a result, Alaska Air now expects its third-quarter 2024 revenue per available seat mile (a key measure of unit revenues) to be up 2% on a year-over-year basis, an improvement from the previous forecast of flat to positive.
ALK continues to expect third-quarter capacity (measured in available seat miles) to increase in the range of 2-3% on a year-over-year basis.
Declining fuel expenses (owing to the moderating crude oil and West Coast refining margins) mark another major positive. ALK now anticipates third-quarter 2024 economic fuel cost per gallon in the range of $2.60-$2.70 (prior view: $2.85-$2.95). Lower fuel costs should boost the company’s bottom line, as fuel expenses represent a key input cost for any transportation player.
Consolidated operating costs per available seat mile (excluding fuel and special items) are still expected to increase in the high single digits.
Given this encouraging outlook, we are keenly waiting for the company’s upcoming third-quarter earnings release.
ALK’s Zacks Rank & Price Performance
ALK currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of ALK have gained 11.3% in the past month, outperforming 3.2% growth of the Zacks Airline industry.
One-Month Price Comparison
Updated Guidance of Other Transportation Companies
JetBlue Airways Corporation (JBLU - Free Report) has recently issued improved third-quarter 2024 guidance on the back of upbeat travel demand.
JBLU now anticipates its third-quarter revenues to be down 2.5% to up 1% on a year-over-year basis. This marks an improvement from the previous guidance of a decline in the range of 1.5-5.5%. JBLU now expects its third-quarter capacity (measured in available seat miles) to decline in the 3-5% range, which marks an improvement over the prior forecast to decline in the 3-6% band.
JetBlue now anticipates third-quarter 2024 average fuel cost per gallon in the range of $2.70 - $2.80 (prior view: $2.82 - $2.97). JBLU now anticipates consolidated operating costs per available seat mile (excluding fuel and special items) to increase in the range of 5-7%, down from the prior expectation of a 6-8% increase.
Canadian National Railway Company(CNI - Free Report) adjusted the outlook for the current year following labor disruptions that threatened to weaken the economy of Canada. The railroad operator now expects adjusted EPS to grow in the low single-digit range compared with its previous expectation of mid to high single-digit growth. Capital expenditures (net of amounts reimbursed by customers) for the current year are still expected to be C$3.5 billion. The railroad operator now expects adjusted return on invested capital for the current year to be in the 13-15% range compared with the previous expectation of roughly 15%.
Following the railroad operator‘s decision to cut the 2024 EPS growth outlook and the weak economic environment, CNI withdrew its previously provided guidance for the 2024-2026 time period. CNI targets compounded annual adjusted EPS growth in the high single-digit range.