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JetBlue (JBLU) Up 67.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for JetBlue Airways (JBLU - Free Report) . Shares have added about 67.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is JetBlue due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Wider-Than-Expected Loss in Q1
The company incurred a loss (excluding 55 cents from non-recurring items) of 42 cents per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of 41 cents. Results were hurt by the coronavirus-induced weakness in air-travel demand.
Moreover, operating revenues of $1,588 million decreased 15.1% year over year and also lagged the the Zacks Consensus Estimate of $1,690 million. The year-over-year plunge was due to the 16.1% decrease in passenger revenues, which accounted for bulk (95.2%) of the top line. Revenues from other sources increased 10.7% to $77 million.
Moreover, revenue per available seat mile (RASM: a key measure of unit revenues) in the reported quarter dropped 12% to 10.67 cents. Passenger revenue per available seat mile (PRASM) fell 13% to 10.15 cents. Average fare at JetBlue during the quarter inched up 4.6% to $185.44. Yield per passenger mile increased 2.8% year over year to 14.54 cents.
Capacity, measured in available seat miles, contracted 3.5% year over year. Meanwhile, traffic, measured in revenue passenger miles, deteriorated 18.4% due to softness in air-travel demand. Consolidated load factor (percentage of seats filled by passengers) contracted 12.7 percentage points year over year to 69.8% as traffic decline was more than the capacity reduction in the reported quarter.
In the first quarter, total operating expenses (on a reported basis) increased 7.1% year over year, partly due to higher costs pertaining to salaries, wages and benefits. Average fuel cost per gallon (including fuel taxes) decreased 9.3% year over year to $1.86. JetBlue’s operating expenses per available seat mile (CASM) increased 11% to 12.91 cents. Excluding fuel, the metric increased 4%.
JetBlue exited the quarter with cash and cash equivalents of $1,618 million compared with $959 million at the end of 2019. Total debt at the end of the reported quarter was $3,217 million compared with $2,334 million at 2019 end.
Management at JetBlue stated that due to the various measures undertaken to combat the current pandemic-inflicted crisis, it successfully lowered its cash burn from $18 million per day, on average, during the second half of March to just under $10 million by May. This excludes the CARES Act support of approximately $5 million per day through Sep 30, 2020. Moreover, the carrier expects second-quarter capacity to be reduced 80% compared to its original plan.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -20.18% due to these changes.
VGM Scores
At this time, JetBlue has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, JetBlue has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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JetBlue (JBLU) Up 67.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for JetBlue Airways (JBLU - Free Report) . Shares have added about 67.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is JetBlue due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Wider-Than-Expected Loss in Q1
The company incurred a loss (excluding 55 cents from non-recurring items) of 42 cents per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of 41 cents. Results were hurt by the coronavirus-induced weakness in air-travel demand.
Moreover, operating revenues of $1,588 million decreased 15.1% year over year and also lagged the the Zacks Consensus Estimate of $1,690 million. The year-over-year plunge was due to the 16.1% decrease in passenger revenues, which accounted for bulk (95.2%) of the top line. Revenues from other sources increased 10.7% to $77 million.
Moreover, revenue per available seat mile (RASM: a key measure of unit revenues) in the reported quarter dropped 12% to 10.67 cents. Passenger revenue per available seat mile (PRASM) fell 13% to 10.15 cents. Average fare at JetBlue during the quarter inched up 4.6% to $185.44. Yield per passenger mile increased 2.8% year over year to 14.54 cents.
Capacity, measured in available seat miles, contracted 3.5% year over year. Meanwhile, traffic, measured in revenue passenger miles, deteriorated 18.4% due to softness in air-travel demand. Consolidated load factor (percentage of seats filled by passengers) contracted 12.7 percentage points year over year to 69.8% as traffic decline was more than the capacity reduction in the reported quarter.
In the first quarter, total operating expenses (on a reported basis) increased 7.1% year over year, partly due to higher costs pertaining to salaries, wages and benefits. Average fuel cost per gallon (including fuel taxes) decreased 9.3% year over year to $1.86. JetBlue’s operating expenses per available seat mile (CASM) increased 11% to 12.91 cents. Excluding fuel, the metric increased 4%.
JetBlue exited the quarter with cash and cash equivalents of $1,618 million compared with $959 million at the end of 2019. Total debt at the end of the reported quarter was $3,217 million compared with $2,334 million at 2019 end.
Management at JetBlue stated that due to the various measures undertaken to combat the current pandemic-inflicted crisis, it successfully lowered its cash burn from $18 million per day, on average, during the second half of March to just under $10 million by May. This excludes the CARES Act support of approximately $5 million per day through Sep 30, 2020. Moreover, the carrier expects second-quarter capacity to be reduced 80% compared to its original plan.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -20.18% due to these changes.
VGM Scores
At this time, JetBlue has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, JetBlue has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.