Will Air France-KLM (AFLYY) Earnings Miss Estimates in Q2?

Air France-KLM SA (AFLYY) is scheduled to release its second-quarter 2014 financial numbers on July 25, 2014, before the opening bell.

In the previous quarter, the company had missed the Zacks Consensus Estimate by a margin of 18.95%. Let's see how things are shaping up for this announcement.

Factors to Be Considered This Quarter

Recently, Air France-KLM reduced its full-year profit forecast. The company now expects full-year profit between €2.2 and €2.3 billion, down from the previous expectation of €2.5 billion. The airline behemoth blamed overcapacity on transatlantic routes, weak cargo demand and a currency dispute in Venezuela for the cautious outlook.

Moreover, high jet fuel prices coupled with a constant rise in international capacity as against demand could weigh on the performance of the company while moving ahead.

Earnings Whispers?

Our proven model does not conclusively show that Air France-KLM SA 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 #3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zero Zacks ESP: This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 67 cents. This leads to an ESP of 0.00% for Air France-KLM SA.

Zacks Rank: Air France-KLM SA has a Zacks Rank #4 (Sell).

We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

Other Stocks to Consider

Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.

GOL Linhas A GOL has an earnings ESP of +175% and carries a Zacks Rank #3.

Spirit Airlines, Inc. SAVE has an earnings ESP of +5.88% and carries a Zacks Rank #2.

ArcBest Corporation ARCB has an earnings ESP of +5.56% and carries a Zacks Rank #2.

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