Earnings estimates for
Republic Airways Holdings Inc.
) have increased sharply in the past 30 days, helping the company
reach Zacks Rank #1 (Strong Buy) status on January 9, 2013.
Moreover, shares have soared since December 31, 2012. A forward P/E
multiple of just 5.5 and a P/S multiple as low as 0.1 make Republic
Airways an attractive pick for value investors.
A Mixed Q3
On October 31, Republic Airways reported third-quarter earnings per
share of 51 cents, outpacing the Zacks Consensus Estimate by 18.6%
and the year-ago result by 27.5%. RJET has now surpassed the Zacks
Consensus Estimate for five straight quarters with an average
surprise of nearly 35%.
However, total revenue of $713.1 million decreased 7.1% year over
year and also lagged the Zacks Consensus Estimate.The drop in
revenue was primarily due to a $29.3 million decrease in fuel
reimbursed under the company's fixed-free agreements, coupled with
lower block hour production. On the other side, the bottom line
made a huge jump on effective restructuring efforts completed in
Climbing Estimate Revisions
The Zacks Consensus Estimate for 2012 has advanced 21.3% to $1.14
over the past 30 days, as all 3 estimates were revised higher. The
Zacks Consensus Estimate for 2013 jumped 34.5% to $1.52 in the same
time, as 4 of 5 estimates were hoisted. These estimates suggest
substantial year-over-year gains of 850% for 2012 and 33.2% for
The current valuation of Republic Airways looks promising. The
company has a current forward P/E multiple of 5.5, a P/S multiple
as low as 0.1 and a P/B multiple of just 0.8 (a P/E ratio below
15.0, a P/S ratio below 1.0 and a P/B ratio under 3.0 generally
indicate value). These multiples are below the peer group averages,
indicating that Republic Airways is undervalued at present.
The company has other solid fundamentals as well, including a PEG
ratio of 0.11 and an 89% discount to the benchmark of 1.0 for a
fairly valued stock. This implies strong growth potential. Another
encouraging multiple is its trailing 12-month ROE of 11.8%,
compared with the industry average of 10.1%.
The widening gap between the stock price and earnings estimates for
2013 and 2014 reinforce that Republic Airways is undervalued. The
company is likely to sustain its positive trend riding on the back
of its growing business opportunities.
Headquartered in Indianapolis, Indiana, Republic Airways Holdings
Inc. was founded in 1996. The company operates through its four
subsidiaries: Chautauqua Airlines, Frontier Airlines, Republic
Airlines and Shuttle America. Republic Airways has a portfolio of
over 280 aircraft offering passenger service on nearly 1,500
flights daily to over 145 cities in the U.S., Bahamas, Canada,
Costa Rica, Dominican Republic, Jamaica, and Mexico. Republic
Airways currently has a market capital of approximately $406.8
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