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SkyWest, Inc. (SKYW) Hit a 52 Week High, Can the Run Continue?

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Have you been paying attention to shares of SkyWest (SKYW - Free Report) ? Shares have been on the move with the stock up 14.9% over the past month. The stock hit a new 52-week high of $79.56 in the previous session. SkyWest has gained 49% since the start of the year compared to the 0.4% move for the Zacks Transportation sector and the 17.2% return for the Zacks Transportation - Airline industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 25, 2024, SkyWest reported EPS of $1.45 versus consensus estimate of $1.24.

For the current fiscal year, SkyWest is expected to post earnings of $6.81 per share on $3.36 billion in revenues. This represents a 784.42% change in EPS on a 14.58% change in revenues. For the next fiscal year, the company is expected to earn $7.98 per share on $3.7 billion in revenues. This represents a year-over-year change of 17.17% and 9.86%, respectively.

Valuation Metrics

SkyWest may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

SkyWest has a Value Score of A. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 11.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 9.3X. On a trailing cash flow basis, the stock currently trades at 7.6X versus its peer group's average of 5.3X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, SkyWest currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if SkyWest passes the test. Thus, it seems as though SkyWest shares could have a bit more room to run in the near term.

How Does SKYW Stack Up to the Competition?

Shares of SKYW have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Copa Holdings, S.A. (CPA - Free Report) . CPA has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of F.

Earnings were strong last quarter. Copa Holdings, S.A. beat our consensus estimate by 14.62%, and for the current fiscal year, CPA is expected to post earnings of $16.15 per share on revenue of $3.7 billion.

Shares of Copa Holdings, S.A. have gained 7.4% over the past month, and currently trade at a forward P/E of 6.41X and a P/CF of 4.16X.

The Transportation - Airline industry may rank in the bottom 56% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for SKYW and CPA, even beyond their own solid fundamental situation.

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