Republic Airways Holdings Inc.RJET , the parent company of Chautauqua Airlines, Republic Airlines and Shuttle America, will replace MAXIMUS, Inc. MMS in the S&P SmallCap 600 after the close of trading on March 11.
A company needs to fulfill certain criteria to be included in the S&P 600. Its market capitalization needs to range from $400 million to $1.8 billion. As of Mar 9, 2015, the market capitalization of Republic Airways was $608.49 million. Subject to periodical review to ensure uniformity with market conditions, the market capitalization of a prospective addition to an index is viewed in the context of its short and medium-term historical trends, vis-à-vis that of the industry.
The company needs to have sufficient liquidity and a reasonable price. The ratio of annual dollar value traded to float adjusted market capitalization should be 1 or greater. Moreover, the company should trade at least 250,000 shares in each of the six months leading up to the evaluation date.
For index requirements, a U.S. company needs to posses the following characteristics as well. It should file 10-K annual reports and should not be considered a foreign entity by the SEC. The U.S. portion of fixed assets and revenues must comprise a majority of the total, but need not be above 50%. When there is an inconsistency among these factors, assets establish plurality. Revenues determine plurality in the event of incomplete asset information. The company should follow a corporate governance structure in line with the U.S. practice.
The stock should be primarily listed on the NYSE (including NYSE Arca and NYSE MKT), the NASDAQ Global Select Market, the NASDAQ Select Market or the NASDAQ Capital Market. ADRs are not qualified for addition. The public float of the stock should be a minimum of 50%. The trailing four quarters' average earnings surprise should be positive, along with a mandatory earnings beat in the last reported quarter.
Headquartered in Indianapolis, IN, Republic Airways fulfills all these criteria and has thereby been added to the S&P SmallCap 600 GICS "Industrials" sector or Airlines Sub-Industry index. We note that as of Feb 27, 2015, the "Financials" sector had the highest representation (23.2%) on the S&P SmallCap 600 index. The Industrials sector came third in terms of representation (16%). The Telecommunication Services sector was least represented (0.7%).
As of Feb 27, the mean market capitalization of the 600 constituents was $1.2 billion, while the median market cap was nearly $1.1 billion.
Republic Airways has a portfolio of approximately 240 aircraft providing scheduled passenger services on nearly 1,300 flights daily to approximately 100 cities in the U.S., Canada and the Caribbean.
Republic Airways currently carries a Zacks Rank #3 (Hold). Stocks that warrant a look in the airline space are Delta Air Lines, Inc. DAL and Southwest Airlines Co. LUV . Both stocks hold a Zacks Rank #2 (Buy).
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