Back to top

Image: Bigstock

Solid Balance Sheet Aids JetBlue (JBLU), Rising Costs Ail

Read MoreHide Full Article

We have recently updated a report on JetBlue Airways Corporation (JBLU - Free Report) .

The stock has gained 37% in the past year compared with 34.6% rally of the industry it belongs to.

Zacks Investment Research
Image Source: Zacks Investment Research

Air-travel demand is improving gradually as more and more people take to the skies, following widespread vaccination programs. Passenger revenues (which contributed bulk to the top line) increased 22.4% to $2,058 million in the first half of 2021. Load factor (percentage of seats filled by passengers) increased 8.3 percentage points to 73.1% in the said period.

JetBlue’s liquidity position is impressive. The carrier exited the second quarter with cash and cash equivalents of $3,726 million, higher than its current debt level of $432 million. This implies that the company has enough cash to meet its short-term debt obligations. Its total debt to total capital ratio was 0.54 at the end of second-quarter 2021, lower than the previous quarter’s 0.58. Lower debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is declining and so is the risk of insolvency.

However, rising fuel prices have the potential to hurt JetBlue’s already weak bottom line. Aircraft fuel and related taxes skyrocketed 1,052% to $336 million in the second quarter of 2021. Average fuel cost per gallon rose 5.8% to $1.84 in the first half of 2021. Sequentially, the metric surged 98.8% to $1.91. The metric in the September quarter is estimated to be $2.09.

Zacks Rank & Stocks to Consider

JetBlue currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. (KNX - Free Report) , Landstar System, Inc. (LSTR - Free Report) and Herc Holdings Inc. (HRI - Free Report) . Knight-Swift and Landstar carry a Zacks Rank #2 (Buy), while Herc Holdings sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Knight-Swift, Landstar and Herc Holdings is pegged at 15%, 12% and 49.2%, respectively.

Published in