) reported excellent second-quarter 2012 financial results in early
August, lifting shares of this regional airline operator by more
than 56% since the announcement. The quarter included a positive
earnings surprise of 230%; its third straight quarterly
Earnings estimates have been moving higher, helping SkyWest achieve
a Zacks #1 Rank (Strong Buy) on August 21, 2012. A forward P/B
multiple of just 0.37 and P/S multiple as low as 0.14 make SkyWest
an attractive pick for value investors.
On August 8, SkyWest reported second-quarter earnings per share of
33 cents, which surpassed the Zacks Consensus Estimate by 23 cents
(230%) and last year's earnings by 28 cents (560%). Total revenue
of a little over $937.2 million increased 0.4% year over year, but
lagged the Zacks Consensus Estimate by 0.4%.
The top-line benefited mainly from improvement in on-time,
completion and customer service metrics. The bottom-line made a
huge jump due to the solid top-line coupled with cost reduction
programs initiated by management in 2011.
SkyWest's Traffic Data for the month of August 2012 reflect that
the company's fundamentals are headed in the right direction.
Passenger boarding surged 6.5% year over year to 5,442,243. Revenue
passenger miles and available seal miles increased 3.7% and 1.3%
year over year, respectively. Load factor increased to 82.7 from
80.8 in August 2011.
Earnings Estimate Revisions Climbing
Estimates for SkyWest have been rising over the last 60 days. The
Zacks Consensus Estimate for 2012 moved up 9.7% to 79 cents, while
the Zacks Consensus Estimate for 2013 advanced 6.7% to $1.27. These
outlooks suggest the potential for enormous year-over-year gains of
364% for 2012 and 59.9% for 2013.
SkyWest shares returned to a growth trajectory in early August.
Going forward, there is an untapped potential locked in the stock.
This is evidenced by its current forward P/E multiple of 12.44, P/S
multiple as low as 0.14, and P/B multiple of just 0.37 (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). Furthermore, SkyWest offers a current
dividend yield of 1.7%.
The widening gap between the stock price line and the estimate
lines of 2012 and 2013 indicates that SkyWest is currently
undervalued. The company is likely to sustain its positive trend
riding on the back of its growing business opportunities, which is
reflected in its August 2012 Traffic Data and its recent Capacity
Purchase Agreement with American Airlines.
Headquartered in St. George, Utah, SkyWest Inc. was founded in
1972. The company operates regional airlines serving the U.S.,
Canada, Mexico, and the Caribbean. As of August 2012, SkyWest
conducted approximately 4,200 daily departures through a fleet of
725 regional aircrafts. Additionally, the company also offers
aircraft leasing services.
Want More of Our Best Recommendations?
Zacks' Executive VP, Steve Reitmeister, knows when key trades are
about to be triggered and which of our experts has the hottest
hand. Then each week he hand-selects the most compelling trades and
serves them up to you in a new program called
SKYWEST INC (SKYW): Free Stock Analysis Report
To read this article on Zacks.com click here.