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JetBlue (JBLU) Touches 52-Week High on Multiple Tailwinds
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Shares of Long Island City, NY-based carrier JetBlue Airways Corporation (JBLU - Free Report) hit a 52-week high of $23.37 during the course of the trading session on Jun 14, before retracing a bit to close the session at $23.36. In fact, shares of this low-cost carrier have performed very well in the last one month. The stock rallied 9.8% comfortably outperforming the Zacks categorized Transportation- Airline industry’s gain of 1.1%.
Catalysts Behind the Upsurge
Late last month, while presenting at the 10th Annual Wolfe Research Global Transportation Conference, the carrier issued a bullish projection for revenue per available seat mile (RASM: a key measure of unit revenue) for the second quarter of 2017.
JetBlue now expects this key metric to grow in the band of 4–6% (the previous guidance hinted at year-over-year growth in the band of 3–6% for the same period) in the current quarter. This bullish guidance was reiterated by the company while releasing its May traffic report. Moreover, the company stated that the RASM outlook for the third quarter has substantially improved since the first-quarter conference call in April.
Apart from the bullish unit revenue view, this Zacks Rank #3 (Hold) carrier’s efforts to maintain capacity (available seat miles) discipline are also encouraging. In line with this objective, the carrier’s registered a consolidated capacity growth of 3.7% in May, which compares favorably with the April figure of 6.6%.
Moreover, its efforts to expand the popular premium service (Mint) are extremely encouraging. We note that JetBlue’s Mint service has gained tremendous popularity, particularly among the corporate class, since it was launched in 2014. This is mainly because of its affordability compared to the charge on business travel imposed by its peers. In fact, prior to the introduction of its Mint service, JetBlue used to offer only coach-class seats to its customers. Now, customers availing JetBlue’s premium service have access to the comfort of lie-flat beds, private suites, 15-inch video screens, besides other special amenities.
A Broker Favorite
We note that earnings estimates for JetBlue have exhibited a healthy uptrend. Over the last 60 days, the Zacks Consensus Estimate of earnings for the current quarter has gone up 8.5% to 51 cents per share, due to multiple upward revisions. Likewise, the Zacks Consensus Estimate for full-year 2017 has jumped 6.2% over the last two months to $1.88 per share.
Given the wealth of information at the disposal of brokers, it is in the best interests of investors to be guided by broker advice and the direction of their estimate revisions. The direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Valuation & Style Score
In terms of enterprise value (EV) to EBITDA ratio, which is often used to value airline stocks, given their significant debt levels and high depreciation and amortization expenses, JetBlue’s valuation looks attractive currently.
The carrier currently has a trailing 12-month EV/EBITDA ratio of 5.2, which compares favorably with the market at large, as the current EV/EBITDA for the S&P 500 is at 10.88 and the median level (over the last two years) is 9.85. The stock’s favorable positioning compared to the overall market certainly signals more upside.
Additionally, the stock has an attractive VGM Score of ‘A’. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Shares of Ryanair, Air France and Deutsche Lufthansa gained above 30%, 100% and 69%, respectively, over the last three months.
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JetBlue (JBLU) Touches 52-Week High on Multiple Tailwinds
Shares of Long Island City, NY-based carrier JetBlue Airways Corporation (JBLU - Free Report) hit a 52-week high of $23.37 during the course of the trading session on Jun 14, before retracing a bit to close the session at $23.36. In fact, shares of this low-cost carrier have performed very well in the last one month. The stock rallied 9.8% comfortably outperforming the Zacks categorized Transportation- Airline industry’s gain of 1.1%.
Catalysts Behind the Upsurge
Late last month, while presenting at the 10th Annual Wolfe Research Global Transportation Conference, the carrier issued a bullish projection for revenue per available seat mile (RASM: a key measure of unit revenue) for the second quarter of 2017.
JetBlue now expects this key metric to grow in the band of 4–6% (the previous guidance hinted at year-over-year growth in the band of 3–6% for the same period) in the current quarter. This bullish guidance was reiterated by the company while releasing its May traffic report. Moreover, the company stated that the RASM outlook for the third quarter has substantially improved since the first-quarter conference call in April.
Apart from the bullish unit revenue view, this Zacks Rank #3 (Hold) carrier’s efforts to maintain capacity (available seat miles) discipline are also encouraging. In line with this objective, the carrier’s registered a consolidated capacity growth of 3.7% in May, which compares favorably with the April figure of 6.6%.
Moreover, its efforts to expand the popular premium service (Mint) are extremely encouraging. We note that JetBlue’s Mint service has gained tremendous popularity, particularly among the corporate class, since it was launched in 2014. This is mainly because of its affordability compared to the charge on business travel imposed by its peers. In fact, prior to the introduction of its Mint service, JetBlue used to offer only coach-class seats to its customers. Now, customers availing JetBlue’s premium service have access to the comfort of lie-flat beds, private suites, 15-inch video screens, besides other special amenities.
A Broker Favorite
We note that earnings estimates for JetBlue have exhibited a healthy uptrend. Over the last 60 days, the Zacks Consensus Estimate of earnings for the current quarter has gone up 8.5% to 51 cents per share, due to multiple upward revisions. Likewise, the Zacks Consensus Estimate for full-year 2017 has jumped 6.2% over the last two months to $1.88 per share.
Given the wealth of information at the disposal of brokers, it is in the best interests of investors to be guided by broker advice and the direction of their estimate revisions. The direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Valuation & Style Score
In terms of enterprise value (EV) to EBITDA ratio, which is often used to value airline stocks, given their significant debt levels and high depreciation and amortization expenses, JetBlue’s valuation looks attractive currently.
The carrier currently has a trailing 12-month EV/EBITDA ratio of 5.2, which compares favorably with the market at large, as the current EV/EBITDA for the S&P 500 is at 10.88 and the median level (over the last two years) is 9.85. The stock’s favorable positioning compared to the overall market certainly signals more upside.
Additionally, the stock has an attractive VGM Score of ‘A’. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Stocks to Consider
Better-ranked stocks in the airline space are Ryanair Holdings (RYAAY - Free Report) , Air France-KLM SA (AFLYY - Free Report) and Deutsche Lufthansa AG (DLAKY - Free Report) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Ryanair, Air France and Deutsche Lufthansa gained above 30%, 100% and 69%, respectively, over the last three months.
3 Stocks to Ride a 588% Revenue Explosion
At Zacks, we're mostly focused on short-term profit cycles, but the hottest of all technology mega-trends is starting to take hold...
By last year, it was already generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. See Zacks' Top 3 Stocks to Ride This Space >>