Airlines have been in the news for all of the wrong reasons over the past few months amid a string of passenger related incidents. However, despite some turbulent press from a few major names like United Continental Holdings Inc (NYSE:UAL), the industry is set to soar overall this summer, and Hawaiian Holdings, Inc. (NYSE:HA) is a stock positioned very well in the sector.
Hawaiian Airlines is already the largest airline based in the Hawaiian Islands, and it could be poised to see an uptick in passenger flights.
According to the Airlines for America lobbying group, nearly 2.54 million people will fly every day between June and August, bringing the summer total to roughly 234.1 million people overall—an all-time high.
Summer travel is a big key for airlines, so this 4% year-over-year growth represents a potentially large windfall for the industry as a whole, as well as Hawaiian.
Last quarter, when some other airlines took a hit, Hawaiian beat the Zacks Consensus Estimate for both earnings and revenue, which helped send its shares up 17% in April. Hawaiian also raised its guidance and its full-year range for available seat miles.
Today, Hawaiian Holdings is a Zacks Rank #1 (Strong Buy). The Zacks Rank is strongly linked to earnings estimate revisions, therefore a Zacks Rank #1 (Strong Buy) is most often based on positive revision trends. We have seen seven positive estimate revisions to Hawaiian’s full-year earnings estimates, as well as five positive revisions to its current-quarter estimates, within the last 60 days.
It’s also our belief that your best stocks tend to come from the best performing industries. Airlines currently sit in the Top 21% of the Zacks Industry Rank, so this is another positive indicator.
Look for this industry, and the overall Transportation sector, to feel a boost from a strong summer travel season.
Furthermore, Hawaiian scored an “A” for both Value and Growth in our Zacks Style Score system. Our current full-year Zacks Consensus Estimate calls for annual sales growth of 12.43% this year, which is well above the industry average of 5.10%. Hawaiian’s forward P/E ratio is an impressive 9.58.
While it may seem like rocky times for airlines, the industry is actually set to grow. Hawaiian just might be ready to soar as high as any other giants of the sector.
We expect Hawaiian to report again on July 20.
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