Research Library
Below is our research library, listed in reverse chronological order. Please use the search box to look for research on a specific company or topic, or use the Calendar, Archives, or Sector links at left to browse for research from a specific time period or sector. If you are a Wolfe Trahan client and can not access any of the links in our library, please contact ITSupport@WolfeResearch.com to request our PDF decryption plug-in.
HA: Solid results but shares close to fair value, in our view
EPS of $0.22 beat our estimate of $0.17, which was in line with the consensus estimate due to slightly better revenue and slightly better costs – both came in better than the high end of HA’s range (an abundance of smallish cost items broke HA’s way late in the quarter, as sometimes happens). Demand trends appear to be holding up in all three of HA’s core markets, but competitive capacity in the company’s largest region by revenue, North America to Hawaii, appears to be getting very difficult in 3Q12 due to incursions by ALGT and ALK. We think most investors are aware of this at a qualitative level, but schedule data shows HA’s competitive capacity in that region is set to increase an uncomfortable 15% y/y in 3Q12.
SAVE: Big relief on non-fuel cost outlook; Reiterate Outperform
SAVE reported good results today but the stock sold off with the group in a tough market – but more important to us was commentary on non-fuel costs beyond 3Q12. SAVE is experiencing a mini bow wave of cost pressures in 2Q and 3Q relating to the replacement and overhaul of broken aircraft seats, but this issue appears to be abating at a fast clip beyond 3Q. Management spoke candidly, telling investors they knew they needed to do better… despite recording a 16.3% operating margin (+150 bp y/y) – likely among the highest in the global industry! Most other airlines can only dream of that kind of performance yet we heard no traces of defensiveness or complacency when asked about cost pressures. In fact, the runway for cost improvements appears solid. This is a business before it’s an airline, and shares remain bizarrely inexpensive, in our opinion.
UAL: Cutting 2Q12 estimates on accounting adjustment
UAL filed an 8-K this morning and surprisingly disclosed an accounting adjustment that resulted in an approximate 60 bp reduction to our 2Q12 consolidated PRASM growth estimate, equating to a reduction of $0.12 to our 2Q12 EPS estimate from $1.72 to $1.60. UAL also disclosed $206M of other, mostly merger-related non-recurring costs (though this was expected).
Research Library
- Coverage List
- Consolidated Research Library
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- Accounting & Tax Policy Library
- Auto & Truck Manufacturing Library
- Airlines Library
- Conference Calls
- Interactive Doh! Models
- Ed Wolfe Bi-Weekly Freight Update