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SkyWest (SKYW) Earnings Surpass Estimates in Q1, Up Y/Y

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Shares of SkyWest, Inc. (SKYW - Free Report) have gained 4.4% since it reported better-than-expected earnings per share and revenues for the first quarter of 2018.

Markedly, this regional carrier’s first-quarter earnings per share came in at $1.03, well above the Zacks Consensus Estimate of 84 cents. Also, the bottom line expanded 58.5% on a year-over-year basis. Results were aided by higher revenues and a lower tax rate.

Quarterly revenues increased significantly year over year to $783.4 million, outpacing the Zacks Consensus Estimate of $754.5 million. The top line benefited from the company’s improved fleet mix.

SkyWest, Inc. Price, Consensus and EPS Surprise

 

SkyWest, Inc. Price, Consensus and EPS Surprise | SkyWest, Inc. Quote

In fact, SkyWest’s efforts to modernize its fleet and streamline operations are very impressive. The company aims to reduce the 50-seat jets in its fleet and add new E175 aircraft. To this end, this St. George, Utah-based carrier reported a decline in block hours (a measure of aircraft utilization) in the first quarter of 2018. For the first three months of 2018, the carrier reported a 3.6% decrease in block hours. Departures declined 6% and load factor (% of seats filled by passengers) were also down 120 basis points to 77.4%.

In a bid to modernize its fleet, the carrier has added 19 new E175 planes to its fleet and removed 71 unproductive/less-profitable aircraft from its fleet since the first quarter of 2017.

The effective tax rate in the quarter under review declined to 19% from 34% a year-ago mainly owing to the new tax law (Tax Cuts and Jobs Act). Operating expenses, however, were up 3.6% to $695 million.  High labor, fuel and maintenance costs led to the uptick. Average fuel cost per gallon increased 19.4% year over year to $2.40 in the quarter.

This Zacks Rank #2 (Buy) carrier exited the quarter with cash and marketable securities of $645.53 million, down 5.8%. Expenses toward fleet modernization, buybacks and capital investment led to the downturn. Total debt increased more than 3% sequentially to $2.8 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Zacks Transportation industry are keenly awaiting first-quarter earnings reports from key players like C.H. Robinson Worldwide, Inc. (CHRW - Free Report) , Expeditors International of Washington, Inc. (EXPD - Free Report) and Copa Holdings, S.A. (CPA - Free Report) in the coming days. While C.H. Robinson Worldwide is scheduled to report on May 1, Expeditors and Copa Holdings are scheduled to do the same on May 8 and May 9, respectively.

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