U.S. equities traded mixed on Tuesday, with European stocks under pressure amid renewed focus on Italy’s shaky fiscal position. At the sector level, weakness in the Nasdaq Composite and transport stocks was seen initially before buyers swooped back in and cut the losses. Bank stocks continue to languish as Treasury yields drift lower. But it’s airline stocks that caught my eye today, with the entire industry group under pressure from rising energy price.
Crude oil is testing beyond the $75-a-barrel threshold this week, which will hit profit margins via higher fuel costs. Sure, some of this can be passed onto consumers. But competition remains fierce and the temptation to hold the line on prices to protect market share will be intense.
As a result, a number of stocks in the area are moving sharply lower. Here are seven airline stocks losing altitude fast:
Southwest Airlines (LUV)
Southwest Airlines (NYSE:LUV) shares are breaking down out of a month-long consolidation range that capped a four-month uptrend. Watch for a break of the 50-day moving average and test of the 200-day average, which would be worth a decline of roughly 7% from here. Selling pressure started building in late September after crude oil pushed higher after Russia and OPEC ruled out a near-term oil supply increase.
The company will next report results on Oct. 25, before the bell. Analysts are looking for earnings of $1.06 per share on revenues of $5.6 billion. When the company last reported on July 26, earnings of $1.26 per share beat estimates by 3 cents on a 0.2% rise in revenues.
Delta Airlines (DAL)
Delta Airlines (NYSE:DAL) shares have cut below their 50-day moving average and are closing in on their 200-day moving average support line. A break of that level would set up a decline back to the early July lows near $48 a share. The company reported its September operating performance on Tuesday, with revenue per mile up 3.7% from last year. Management is looking for earnings of between $1.70 and $1.80 per share for the third quarter vs. the $1.78 the Street is expecting.
The company will next report results on Oct. 10, before the bell. Analysts are looking for earnings of $1.77 per share on revenues of $11.9 billion. When the company last reported on July 12, earnings of $1.77 beat estimates by 5 cents on a 9.1% rise in revenues.
United Continental (UAL)
United Continental (NASDAQ:UAL) shares are falling down and out of a three-month consolidation range, which threatens their 50-day moving average. Watch for a decline to fill the post-earnings gap from back in July, which would coincide with a test of the 200-day average and be worth a fall of roughly 17% from current levels. The company recently signed a deal with Boeing (NYSE:BA) for nine 787 Dreamliners in a deal valued at $2.5 billion.
The company will next report results on Oct. 17, after the close. Analysts are looking for earnings of $3.05 per share on revenues of $10.8 billion. When the company last reported on July 17, earnings of $3.23 beat estimates by 16 cents on a 7.7% rise in revenues.
American Airlines (AAL)
Shares of American Airlines (NASDAQ:AAL) are in rough shape, threatening to fall out of a five-month consolidation range that capped a decline of more than 30% from the highs seen in March. A breakdown here would put the lows seen back in the summer of 2016 back in play. Not even a recent announcement of an increase in checked bag fees has been enough to generate investor interest.
The company will next report results on Oct. 25, before the bell. Analysts are looking for earnings of $1.22 per share on revenues of $11.6 billion. When the company last reported on July 26, earnings of $1.63 beat estimates by 4 cents on a 3.7% rise in revenues.
JetBlue (JBLU)
JetBlue (NASDAQ:JBLU) shares are once again falling away from resistance near their 200-day moving average — coinciding with the $20-a-share level that has been in place since early April. Watch for a break below its 50-day moving average, which would set up a test of the late July lows near $17. The stock was recently downgraded by analysts at Wolfe Research to sell from neutral.
The company will next report results on Oct. 23, before the bell. Analysts are looking for earnings of 43 cents per share on revenues of $2 billion. When the company last reported on July 24, earnings of 38 cents per share beat estimates by 2 cents on a 5% rise in revenues.
Alaska Air Group (ALK)
Shares of Alaska Air Group (NYSE:ALK) have fallen down and away from a test of the April highs, threatening a move down below both its 50-day and 200-day moving averages. Stock support exists near the April-May lows near $57, which would be worth a loss of roughly 14% from here.
The company will next report results on Oct. 25, before the bell. Analysts are looking for earnings of $1.61 per share on revenues of $2.2 billion. When the company last reported on July 26, earnings of $1.66 per share beat estimates by 4 cents on a 2.6% rise in revenues.
Spirit Airlines (SAVE)
Shares of Spirit Airlines (NYSE:SAVE) are moving sharply lower, cutting below their 50-day moving average to start the process of resting the post-June uptrend that saw shares gain more than 40%. The 200-day moving average looms below; a test of this level would be worth a further decline of 9% from here. While management guided operating expenses, excluding fuel, to decline between 3.5% and 4% for the current fiscal year, the big rally in oil prices will dominate the attention of investors.
The company will next report results on Oct. 24, after the close. Analysts are looking for earnings of $1.17 per share on revenues of $868 million. When the company last reported on July 25, earnings of $1.11 beat estimates by 2 cents on a 21.4% rise in revenues.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
