Despite missing estimates in the last three quarters, analysts expect rising earnings for JetBlue

JetBlue is expected to announce $0.22 earnings per share for the third quarter 2013 on Tuesday. This would be a significant improvement from the same quarter a year earlier, when the low-cost carrier earned $0.14 per share. Analysts expect revenue to be $1.440 billion, compared to $1.308 billion in Q3 2012.

JetBlue has missed estimates three quarters in a row. In the second quarter of 2013 the New York-based airline reported $0.14 earnings per share, shy of the analyst consensus of $0.11 earnings per share. 

But the trends for the third quarter are encouraging, according to an analyst report from Deutsche Bank.

Travel demand was strong during the summer months. JetBlue, the sixth largest U.S. airline, increased capacity by 5.1 percent in the third quarter according to preliminary traffic data.

Deutsche Bank estimates JetBlue’s passenger revenue per available seat mile (PRASM) to rise by 3.3 percent to $11.52. This would compare favorably with the 3.3 percent decrease in the second quarter 2013.

Key figures to look for in its earnings report include JetBlue’s rising airplane maintenance cost and the price of jet fuel.

JetBlue serves 75 destinations in the U.S. and the Caribbean, and has kept maintenance costs low by flying newer planes that require fewer repairs. Its fleet is on average 6.9 years old, considerably younger than the industry average of 12.2 years. But the fleet has been aging. Maintenance cost jumped 44.1 percent in the third quarter of 2012 and Deutsche Bank expects a 27.6 percent increase for this quarter, which will add up to $109 million. Deutsche Bank estimates JetBlue’s fuel price per gallon to decrease 2.2 percent in the third quarter of 2013.

The company’s strategy has been closely watched since introducing higher priced premium seats on transcontinental routes. Analyst Jim Corridore of S&P Capital IQ dismissed the move.

“We think the bigger carriers will compete to maintain transcontinental market share and will not allow JetBlue to make money on these flights,” said Corridore.

JetBlue’s stock outperformed the market in the last twelve months, rising from $5.20 to $7.53, a 43.29 percent increase. But the company’s stock has not performed as well as its competitors. The ARCA airline index rose 70.90 percent in the same time.

And their expectations for the future are not high for the company.

Analysts’ consensus set a 12-months target price of $ 7.45. Only three out of 17 analysts rated the stock a buy. Five analysts advise to sell the stock; nine say hold on to it. JetBlue’s Price-Earnings-ratio is 24.85, higher than industry average (21.12).

For the fourth quarter of 2013 analysts estimate $0.10 earnings per share and $1.33 billion in revenue. For the 2013 fiscal year, they predict that the company would report $0.48 earnings per share and $5.39 billion in revenue. That is better than last year when JetBlue had $0.40 earnings per share and $4.98 billions revenue. For 2014 analysts expect $ 0.63 earnings per share and $ 5.81 billions revenue, and in 2015 $0.68 and $ 6.18 billions respectively.