Republic Airways Holdings, Inc.

Republic Airways Holdings, Inc. (RJET - Snapshot Report) has surprised on estimates four quarters in a row by an average of 6.22% as the regional airlines finds its niche. The stock is cheap. It is trading at only 4x forward earnings.

Company Description

Republic Airways Holdings is a holding company that operates three regional airlines: Chautauqua Airlines, Republic Airlines and Shuttle America.

The company operates 233 regional jets to 99 cities in 34 states, Canada, Mexico and Jamaica under the banner of Continental Express, United Express and others.

Republic Surprises on Third Quarter Estimates by 4.17%

On Oct 29, Republic Airways reported third quarter earnings that beat Wall Street estimates for the fourth consecutive quarter. Net income was $17 million, or 50 cents per share, compared to $20.2 million, or 49 cents, in the third quarter of 2007.

Revenue rose 11.5%, excluding reimbursement for fuel expense which is a pass-through cost to the company's partners. Growth was due to an 8.2% increase in available seat miles and a 3.8% gain in block hours.

Republic added 6 new E175 regional jets during the third quarter. One went into fixed-fee service for US Airways and 5 went into fixed-fee service for Delta. The company also returned one leased 37-seat E135 aircraft to the lessor during the quarter.

The company has cash on hand. As of Sep 30, 2008, it had $134.2 million in cash or cash equivalents which was down from $164 million as of Dec 31, 2007. Long-term debt rose to $2.16 billion at the end of the quarter from $1.91 billion as of Dec 31, 2007. The long-term debt is at fixed interest rates and is secured by the aircraft.

Consensus Estimates Rise for 2008 and 2009

Covering analysts are optimistic about the remainder of 2008 and for full-year 2009.

Estimates for 2008 are up 4 cents to $2.24 per share in the last 60 days. 2009 full-year estimates are at $2.31, up 12 cents in the last 2 months.

Value Fundamentals

Republic Airways is a Zacks #1 Rank (strong buy). It's cheap, trading at only 4.4x forward earnings. The company's price-to-book is 0.76. RJET also has an outstanding 5-year return on equity (ROE) of 18.59%.