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Here's Why Investors Should Give JetBlue (JBLU) a Miss Now
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JetBlue Airways (JBLU - Free Report) is mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 307.7% downward over the past 60 days. For the current year, the consensus mark for earnings has plunged 620% in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank and Style Score: JetBlue currently carries a Zacks Rank #5 (Strong Sell). Moreover, the company’s current Momentum Style Score of F shows its short-term unattractiveness.
Unimpressive Price Performance: JBLU shares have dipped 38.8% over the past six months compared with its industry’s 7.6% decline.
Image Source: Zacks Investment Research
Other Headwinds: JetBlue's performance is being hurt by headwinds like weather-related constraints and high fuel prices. Primarily due to these challenges, management issued a bleak outlook and now projects 2023 loss in the range of 45-65 cents per share (earlier guidance was earnings in the range of 5-40 cents).
An uptick in labor and fuel costs is a concern as well. Management expects current-year non-fuel unit costs to increase in the 8.5-10.5% band from 2022 actuals. The metric is expected to rise 9.1%, per our model. The current scenario of rising fuel costs does not bode well for the airline and is hurting its bottom line. The northward movement in crude price is primarily due to the extension of production cut by Saudi Arabia and Russia through the end of the current year. JBLU’s management expects fourth-quarter fuel cost per gallon in the $3.05-$3.20 range. We expect the metric to be $3.09.
Bearish Industry Rank: The industry, to which JBLU belongs, currently has a Zacks Industry Rank of 207 (of 250 plus groups). Such an unfavorable rank places the industry in the bottom 18% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Airline Stocks to Consider
Investors interested in the Zacks Airline industry may consider some better-ranked stocks like Air Canada (ACDVF - Free Report) and SkyWest (SKYW - Free Report) .
Air Canada currently sports a Zacks Rank #1 (Strong Buy). An uptick in passenger traffic is aiding ACDVF. Recently, management announced plans to launch a new year-round route between Montreal and Madrid. You can seethe complete list of today’s Zacks #1 Rank stocks here.
The service will commence in May of the following year as part of its expanded international summer 2024 flying schedule to cater to increased demand. The Zacks Consensus Estimate for current-year earnings has jumped 32.6% in the past 60 days.
SkyWest currently carries a Zacks Rank #2 (Buy). SKYW's fleet-modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for current-quarter earnings has surged 83.3% in the past 60 days.
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Here's Why Investors Should Give JetBlue (JBLU) a Miss Now
JetBlue Airways (JBLU - Free Report) is mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for current-quarter earnings has been revised 307.7% downward over the past 60 days. For the current year, the consensus mark for earnings has plunged 620% in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank and Style Score: JetBlue currently carries a Zacks Rank #5 (Strong Sell). Moreover, the company’s current Momentum Style Score of F shows its short-term unattractiveness.
Unimpressive Price Performance: JBLU shares have dipped 38.8% over the past six months compared with its industry’s 7.6% decline.
Image Source: Zacks Investment Research
Other Headwinds: JetBlue's performance is being hurt by headwinds like weather-related constraints and high fuel prices. Primarily due to these challenges, management issued a bleak outlook and now projects 2023 loss in the range of 45-65 cents per share (earlier guidance was earnings in the range of 5-40 cents).
An uptick in labor and fuel costs is a concern as well. Management expects current-year non-fuel unit costs to increase in the 8.5-10.5% band from 2022 actuals. The metric is expected to rise 9.1%, per our model. The current scenario of rising fuel costs does not bode well for the airline and is hurting its bottom line. The northward movement in crude price is primarily due to the extension of production cut by Saudi Arabia and Russia through the end of the current year. JBLU’s management expects fourth-quarter fuel cost per gallon in the $3.05-$3.20 range. We expect the metric to be $3.09.
Bearish Industry Rank: The industry, to which JBLU belongs, currently has a Zacks Industry Rank of 207 (of 250 plus groups). Such an unfavorable rank places the industry in the bottom 18% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Airline Stocks to Consider
Investors interested in the Zacks Airline industry may consider some better-ranked stocks like Air Canada (ACDVF - Free Report) and SkyWest (SKYW - Free Report) .
Air Canada currently sports a Zacks Rank #1 (Strong Buy). An uptick in passenger traffic is aiding ACDVF. Recently, management announced plans to launch a new year-round route between Montreal and Madrid. You can see the complete list of today’s Zacks #1 Rank stocks here.
The service will commence in May of the following year as part of its expanded international summer 2024 flying schedule to cater to increased demand. The Zacks Consensus Estimate for current-year earnings has jumped 32.6% in the past 60 days.
SkyWest currently carries a Zacks Rank #2 (Buy). SKYW's fleet-modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for current-quarter earnings has surged 83.3% in the past 60 days.