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Does SkyWest's Lower Valuation Indicate a Buying Opportunity?
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Key Takeaways
SkyWest expands fleet via agreements with UAL, DAL, ALK and Embraer for new E175 deliveries.
SKYW ended Q1 2025 with $627.25M cash, surpassing its current debt of $598.43M for strong flexibility.
Rise in operating expenses, macro-economic uncertainty and pilot shortages continue to bother SKYW.
SkyWest, Inc. (SKYW - Free Report) ) looks cheap from a valuation standpoint. Considering the trailing 12-month price-to-book (P/B) ratio, SkyWest is trading at a discount compared to the industry.
The stock has a trailing 12-month P/B-TTM of 1.34X compared with 3.12X for the industry over the past five years. These factors indicate that the stock’s valuation is attractive. SKYW has a Value Score of A.
SKYW P/B Ratio (Trailing 12 months) Vs. Industry
Image Source: Zacks Investment Research
Now, the question is whether it is worth buying, holding, or selling the SkyWest stock at current prices. Let us delve deeper to find out.
Tailwinds Working in Favor of SkyWest Stock
SkyWest's top line benefits from flying contract rate increases. As of March 31, 2026, SkyWest had cumulative deferred revenues of $240.69 million under its flying contracts. Revenues from flying agreements (contributing 96.5% to the top line) grew 6.7% year over year during first-quarter 2026. Departures increased 1.1% on a year-over-year basis in the first quarter.
SkyWest's fleet-modernization efforts to cater to the improvement in travel demand are commendable. In a bid to modernize its fleet, SKYW had fleet-related agreements with airline heavyweights like United Airlines (UAL - Free Report) , Delta Air Lines (DAL - Free Report) and Alaska Airlines (ALK - Free Report) .
Concurrent with its first-quarter 2026 results, SkyWest intends to convert its CRJ200 aircraft, operating for United Airlines, into 41-seat, dual-class CRJ450s, with the first aircraft entering service in fall 2026. SkyWest had one E175 aircraft delivery for Alaska Airlinesin the first quarter of 2026. The company’s aircraft lease agreements for the E175 fleet, which supports Alaska’s capacity purchase agreement, are set to expire between 2030 and 2034.
Further, UAL is scheduled to deliver eight E175 planes in 2026. Alaska Airlines is expected to deliver one E175 in 2026. DAL is likely to deliver 10 E175 planes in 2027 and six in 2028. By 2028-end, SkyWest anticipates having nearly 300 E175 aircraft in its fleet. As previously announced, SkyWest entered into a purchase agreement with Embraer, which secures delivery positions for 44 additional E175s from 2028 through 2032 for potential future flying opportunities. SkyWest also secured purchase rights on 50 additional E175s from Embraer.
SkyWest’s solid balance sheet increases financial flexibility. The company ended first-quarter 2026 with cash and marketable securities of $627.25 million, higher than the current debt level of $598.43 million. This implies that the company has sufficient cash to meet its current debt obligations. Meanwhile, long-term debt level has decreased to $1.79 billion at the end of first-quarter 2026 from $2.07 billion at the end of the first quarter of 2025.
A strong balance sheet enables the company to reward shareholders with share repurchases. As a reflection of its shareholder-friendly stance, in May 2025, SKYW's existing repurchase plan was increased by $250 million. SkyWest repurchased 783,000 shares for $75 million during the first quarter of 2026. As of March 31, 2026, SkyWest had $138 million available under its current share repurchase program. Buybacks not only reduce the total outstanding share count, thereby increasing earnings per share, but also signal management's belief in the intrinsic value of the stock.
Long-Term Debt to Capitalization
Image Source: Zacks Investment Research
Headwinds Weighing on SkyWest Stock
SkyWest's bottom line continues to be weighed down by a rise in operating expenses. This is due to an increase in employee compensation, which includes higher labor pay scales, increased maintenance and costs related to aircraft maintenance, materials and repair, higher production and higher pilot training costs. SkyWest witnessed a consistent increase in operating expenses from $2.82 billion in 2022 to $2.83 billion in 2023 to $3.03 billion in 2024 to $3.44 billion in 2025. In first-quarter 2026, operating expenses were $889 million, up 10% year over year, owing to an expected increase in incremental direct operating costs associated with higher production and higher pilot training costs.
Macro-economic uncertainty and pilot shortages continue to plague regional carriers like SkyWest. The competition from larger airlines exacerbates the shortage of qualified pilots for regional carriers. This shortage limits the number of flights regional airlines can operate and can lead to increased operating costs due to the need to offer competitive salaries and benefits.
Stock prices of regional airline companies are notoriously volatile. As such, shares of SKYW may not be suitable for investors who are not comfortable with the often-substantial day-to-day volatility.
What Do Earnings Estimates Say for SkyWest?
The negative sentiment surrounding SkyWest stock is evident from the fact that the Zacks Consensus Estimate for the second quarter of 2026 and the third quarter of 2026 earnings has been revised downward in the past 60 days. The consensus mark for 2026 and 2027 earnings has also been projected downward in the past 60 days.
Image Source: Zacks Investment Research
The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Not an Opportune Time to Buy SkyWest Stock
Apart from being attractively valued at present, SkyWest's fleet-modernization efforts remain commendable. In a bid to modernize its fleet, SKYW has fleet-related agreements with airline heavyweights like United Airlines, Delta Air Lines and Alaska Airlines. By 2028-end, SKYW is scheduled to have nearly 300 E175 aircraft. A solid balance sheet allows SKYW to consistently reward shareholders with share repurchases. Such moves should boost investor confidence and positively impact the bottom line.
Despite these positives, we advise investors not to buy SKYW stock now, as it continues to be hurt by a consistent rise in operating expenses. The macroeconomic uncertainty and pilot shortages are also hurting SKYW's prospects. Share price volatility continues to be a cause for worry. Considering all these factors, we advise investors to wait for a better entry point and not buy SKYW now. For those who already own the stock, it will be prudent to stay invested. The company’s current Zacks Rank #3 (Hold) justifies our analysis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Does SkyWest's Lower Valuation Indicate a Buying Opportunity?
Key Takeaways
SkyWest, Inc. (SKYW - Free Report) ) looks cheap from a valuation standpoint. Considering the trailing 12-month price-to-book (P/B) ratio, SkyWest is trading at a discount compared to the industry.
The stock has a trailing 12-month P/B-TTM of 1.34X compared with 3.12X for the industry over the past five years. These factors indicate that the stock’s valuation is attractive. SKYW has a Value Score of A.
SKYW P/B Ratio (Trailing 12 months) Vs. Industry
Now, the question is whether it is worth buying, holding, or selling the SkyWest stock at current prices. Let us delve deeper to find out.
Tailwinds Working in Favor of SkyWest Stock
SkyWest's top line benefits from flying contract rate increases. As of March 31, 2026, SkyWest had cumulative deferred revenues of $240.69 million under its flying contracts. Revenues from flying agreements (contributing 96.5% to the top line) grew 6.7% year over year during first-quarter 2026. Departures increased 1.1% on a year-over-year basis in the first quarter.
SkyWest's fleet-modernization efforts to cater to the improvement in travel demand are commendable. In a bid to modernize its fleet, SKYW had fleet-related agreements with airline heavyweights like United Airlines (UAL - Free Report) , Delta Air Lines (DAL - Free Report) and Alaska Airlines (ALK - Free Report) .
Concurrent with its first-quarter 2026 results, SkyWest intends to convert its CRJ200 aircraft, operating for United Airlines, into 41-seat, dual-class CRJ450s, with the first aircraft entering service in fall 2026. SkyWest had one E175 aircraft delivery for Alaska Airlinesin the first quarter of 2026. The company’s aircraft lease agreements for the E175 fleet, which supports Alaska’s capacity purchase agreement, are set to expire between 2030 and 2034.
Further, UAL is scheduled to deliver eight E175 planes in 2026. Alaska Airlines is expected to deliver one E175 in 2026. DAL is likely to deliver 10 E175 planes in 2027 and six in 2028. By 2028-end, SkyWest anticipates having nearly 300 E175 aircraft in its fleet. As previously announced, SkyWest entered into a purchase agreement with Embraer, which secures delivery positions for 44 additional E175s from 2028 through 2032 for potential future flying opportunities. SkyWest also secured purchase rights on 50 additional E175s from Embraer.
SkyWest’s solid balance sheet increases financial flexibility. The company ended first-quarter 2026 with cash and marketable securities of $627.25 million, higher than the current debt level of $598.43 million. This implies that the company has sufficient cash to meet its current debt obligations. Meanwhile, long-term debt level has decreased to $1.79 billion at the end of first-quarter 2026 from $2.07 billion at the end of the first quarter of 2025.
A strong balance sheet enables the company to reward shareholders with share repurchases. As a reflection of its shareholder-friendly stance, in May 2025, SKYW's existing repurchase plan was increased by $250 million. SkyWest repurchased 783,000 shares for $75 million during the first quarter of 2026. As of March 31, 2026, SkyWest had $138 million available under its current share repurchase program. Buybacks not only reduce the total outstanding share count, thereby increasing earnings per share, but also signal management's belief in the intrinsic value of the stock.
Long-Term Debt to Capitalization
Headwinds Weighing on SkyWest Stock
SkyWest's bottom line continues to be weighed down by a rise in operating expenses. This is due to an increase in employee compensation, which includes higher labor pay scales, increased maintenance and costs related to aircraft maintenance, materials and repair, higher production and higher pilot training costs. SkyWest witnessed a consistent increase in operating expenses from $2.82 billion in 2022 to $2.83 billion in 2023 to $3.03 billion in 2024 to $3.44 billion in 2025. In first-quarter 2026, operating expenses were $889 million, up 10% year over year, owing to an expected increase in incremental direct operating costs associated with higher production and higher pilot training costs.
Macro-economic uncertainty and pilot shortages continue to plague regional carriers like SkyWest. The competition from larger airlines exacerbates the shortage of qualified pilots for regional carriers. This shortage limits the number of flights regional airlines can operate and can lead to increased operating costs due to the need to offer competitive salaries and benefits.
Stock prices of regional airline companies are notoriously volatile. As such, shares of SKYW may not be suitable for investors who are not comfortable with the often-substantial day-to-day volatility.
What Do Earnings Estimates Say for SkyWest?
The negative sentiment surrounding SkyWest stock is evident from the fact that the Zacks Consensus Estimate for the second quarter of 2026 and the third quarter of 2026 earnings has been revised downward in the past 60 days. The consensus mark for 2026 and 2027 earnings has also been projected downward in the past 60 days.
The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Not an Opportune Time to Buy SkyWest Stock
Apart from being attractively valued at present, SkyWest's fleet-modernization efforts remain commendable. In a bid to modernize its fleet, SKYW has fleet-related agreements with airline heavyweights like United Airlines, Delta Air Lines and Alaska Airlines. By 2028-end, SKYW is scheduled to have nearly 300 E175 aircraft. A solid balance sheet allows SKYW to consistently reward shareholders with share repurchases. Such moves should boost investor confidence and positively impact the bottom line.
Despite these positives, we advise investors not to buy SKYW stock now, as it continues to be hurt by a consistent rise in operating expenses. The macroeconomic uncertainty and pilot shortages are also hurting SKYW's prospects. Share price volatility continues to be a cause for worry. Considering all these factors, we advise investors to wait for a better entry point and not buy SKYW now. For those who already own the stock, it will be prudent to stay invested. The company’s current Zacks Rank #3 (Hold) justifies our analysis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.