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Virgin America (VA) Q1 Earnings: Stock to Pull a Surprise?

Virgin America Inc. VA is set to release first-quarter 2016 results after the market closes on Apr 28.

Last quarter, the company’s earnings came in line with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.

Factors at Play this Quarter

Virgin America reported a significant rise in air traffic for Mar 2016. Traffic, which is measured in revenue passenger miles (RPMs), was up 14.6% on a year-over-year basis to 977.46 million. Moreover, capacity (or available seat miles/ASMs) soared 15.1% to 1.16 billion.

Moreover, onboard passengers were up 14.9%. In the first three months of the year, traffic climbed 15.9% on a 15.8% capacity expansion. Load factor remained flat at 80.1%.

On the flip side, Virgin America has been witnessing declining operating revenue per available seat mile (RASM – a key measure of unit revenue), like many other airline players. In fact, the carrier projects a 3–5% drop in its first-quarter RASM.

We note that Alaska Air Group ALK has won the bidding war against JetBlue Airways Corporation JBLU to take over Virgin America. We expect investor focus to remain on further updates related to this burning issue.

Earnings Whispers

Our proven model does not conclusively show that Trinity is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here, as elaborated below.

Zacks ESP:  Trinity Industries has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and Zacks Consensus Estimate stand at 36 cents.

Zacks Rank: Trinity carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s 0.00% ESP makes earnings prediction difficult.

A Stock to Consider

Here is a company you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter.

Copa Holdings SA CPA, with an Earnings ESP of +8.70% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report
COPA HLDGS SA-A (CPA): Free Stock Analysis Report
ALASKA AIR GRP (ALK): Free Stock Analysis Report
VIRGIN AMERICA (VA): Free Stock Analysis Report
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