SkyWest, Inc.

SkyWest, Inc. (SKYW - Snapshot Report) recently reported that its November passenger traffic jumped 9.4% and its load factor also climbed as the company flew fuller planes. SkyWest has attractive valuations, with a forward P/E of just 11.2.

Company Description

SkyWest is the holding company for SkyWest Airlines which was founded in 1972 to service customers in Utah. It now services customers in 146 cities, including one Mexican city, in 39 states and 6 Canadian Provinces.

It operates flights for United Express, Delta Connection and Midwest Connect. It is the primary carrier for United Express along the West Coast and for Delta Connection out of Salt Lake City. It services Midwest Connect customers out of Milwaukee.

As of Sep 30, SkyWest had 446 aircraft in its fleet, including 392 regional jets and 51 EMB-120 aircraft.

SkyWest Surprised on Third Quarter Estimates

On Nov 5, SkyWest reported its third quarter results which beat the Zacks Consensus Estimate by 11.11%, or 5 cents. Earnings per share were 50 cents compared to the Zacks Consensus of 45 cents. EPS was 45 cents in the year ago period.

Operating revenues fell 32% to $637.8 million from $934.1 million in the year ago quarter mainly due to a reduction in fuel cost reimbursements paid by SkyWest's partners, such as United and Delta.

SkyWest receives reimbursement from its big partners for fuel and other costs under its contract flying arrangements which are then reported as operating revenues by the company.

The decline in revenue was partially offset, however, by a 3.2% increase in block hours over the year ago period.

Passengers carried also rose 8.5% to 9,477,672 from 8,738,704 in the third quarter of 2008.

Zacks Consensus Jumped

Analysts have gotten more bullish in the last 2 months as fourth quarter estimates are up 7 cents to 41 cents per share during that time.

1 out of 3 covering analysts raised 2009 estimates in the last month. The 2009 Zacks Consensus is up 2 cents to $1.57 during that period. Analysts also expect 12.13% earnings growth in 2010 as the 2010 Zacks Consensus has climbed to $1.76 from $1.70 in the last 30 days.

Value Fundamentals

SkyWest is a Zacks #1 Rank (buy) stock. It has a price-to-book of just 0.73. SkyWest also has a solid 5-year average return on equity of 11.49%.

The company has a tremendous track record of rewarding shareholders as it recently approved its 58th consecutive dividend. It is currently yielding 0.90%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

Read the full analyst report on SKYW