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SkyWest (SKYW) Up 22.9% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for SkyWest (SKYW - Free Report) . Shares have added about 22.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is SkyWest due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

SkyWest Reports Loss in Q2

SkyWest‘s loss of 51 cent per share was wider than the Zacks Consensus Estimate of a loss of 2 cents.  Results were hurt by coronavirus-induced low air-travel demand. The company reported earnings of $1.71 per share in the year-ago quarter when air-travel demand was strong. 

Moreover, quarterly revenues of $350 million plunged 53% year over year and missed the Zacks Consensus Estimate of $352.4 million. The COVID-19 pandemic caused a significant reduction in the number of scheduled flights, thereby hurting the top line.

Revenues from flying agreements (contributing 96.1% to the top line) decreased 53.6% from the year-ago quarter’s figure. Total expenses fell 41% to $354.4 million due to lower number of operating flights. The carrier reported a 66% decline in block hours (a measure of aircraft utilization) during the reported quarter. Passenger load factor (percentage of seats filled by passengers) deteriorated 4950 basis points to 34.4% in the reported quarter due to shrink in air travel demand thanks to the pandemic.

Liquidity

The company exited the second quarter with cash and marketable securities of $762 million, up from $520 million at 2019 end.  Long-term debt (net of current maturities) inched up 1.3% year over year to $2.6 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -117.65% due to these changes.

VGM Scores

At this time, SkyWest has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise SkyWest has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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