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The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $1.73 per share and $814.40 million, respectively.
The earnings estimate for the to-be-reported quarter has remained stable over the past 60 days. The bottom-line projection indicates year-over-year growth of 394.3%. The Zacks Consensus Estimate for quarterly revenues suggests a relatively modest year-over-year increase of 12.2%.
Image Source: Zacks Investment Research
SKYW has an awe-inspiring earnings surprise history, as reflected in the chart below.
Image Source: Zacks Investment Research
Earnings Whispers for Q2
Our proven model predicts an earnings beat for SkyWest this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
We expect revenues from flying agreements (which account for the bulk of the top line) to have been impressive in the to-be-reported quarter. The Zacks Consensus Estimate for operating revenues from flying agreements is currently pegged at $773 million, implying an increase of 10.4% from second-quarter 2023 actuals.
Owing to an uptick in air-travel demand, passenger volumes are likely to have been upbeat, in turn boosting the top line in the quarter under review for this regional carrier. Passenger load factor (% of seats occupied by passengers) is likely to have improved in the to-be-reported quarter owing to higher traffic.
The improvement in the scenario concerning pilot staffing is likely to have resulted in an increase in block hours (a measure of aircraft utilization) in the second quarter of 2024 from the year-ago actuals. Operating expenses are, however, likely to have been high in the June quarter due to higher expenses on salaries, wages, and benefits. An increase in expenses on aircraft fuel following an uptick in oil price is also likely to have pushed up operating costs. The Zacks Consensus Estimate for aircraft fuel expenses is currently pegged at $25 million, suggesting an increase of 3.7% from second-quarter 2023 actuals.
Price Performance & Valuation
On a year-to-date basis, shares of SKYW have surged in excess of 57%, outperforming the industry and the likes of Delta Air Lines (DAL - Free Report) and United Airlines (UAL - Free Report) , for whom SKYW operates regional jets.
YTD Price Comparison
Image Source: Zacks Investment Research
From a valuation perspective, SkyWest is trading at a discount compared to the industry going by its price/sales ratio. The company is trading at a forward sales multiple of 0.94 compared to its industry’s 0.99. The company has a Value Score of A. The reading is, however, above its median of 0.66 over the last five years.
Image Source: Zacks Investment Research
Investor Considerations
SKYW's track record of successfully meeting the requirements of each of its airline heavyweight partners bodes well for the company. It is quite evident that the current production delays at plane manufacturer Boeing (BA - Free Report) have hurt the fleet-related plans of airline heavyweights in the United States. However, this supply-chain mess worked in favor of SkyWest and improved its pilot-staffing scenario.
Due to the Boeing-induced delivery delays, many major airlines have paused/slowed pilot hiring, which, in turn, slowed down the migration of employees from regional to mainline airlines. Some employees even returned to regional airlines like SKYW from major airlines in this scenario to save their jobs. This situation is aiding SKYW’s fleet utilization. As a result, SKYW’s top line is likely to have been in good shape. SKYW’s balance sheet also looks solid and is likely to gain in strength going forward.
Last Word
Given SKYW’s favorable valuation picture compared to its industry, upbeat passenger volumes, and improved picture with respect to fleet utilization, we believe investors should add SKYW stock to their portfolios ahead of its earnings release on Jul 25 for healthy returns. SkyWest’s current Zacks Rank supports our thesis.
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Should You Buy SkyWest (SKYW) Stock Ahead of Q2 Earnings?
SkyWest (SKYW - Free Report) is scheduled to release second-quarter 2024 results on Jul 25, after market close.
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $1.73 per share and $814.40 million, respectively.
The earnings estimate for the to-be-reported quarter has remained stable over the past 60 days. The bottom-line projection indicates year-over-year growth of 394.3%. The Zacks Consensus Estimate for quarterly revenues suggests a relatively modest year-over-year increase of 12.2%.
SKYW has an awe-inspiring earnings surprise history, as reflected in the chart below.
Earnings Whispers for Q2
Our proven model predicts an earnings beat for SkyWest this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
SKYW has an Earnings ESP of +0.96% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Shape SKYW’s Q2 Results
We expect revenues from flying agreements (which account for the bulk of the top line) to have been impressive in the to-be-reported quarter. The Zacks Consensus Estimate for operating revenues from flying agreements is currently pegged at $773 million, implying an increase of 10.4% from second-quarter 2023 actuals.
Owing to an uptick in air-travel demand, passenger volumes are likely to have been upbeat, in turn boosting the top line in the quarter under review for this regional carrier. Passenger load factor (% of seats occupied by passengers) is likely to have improved in the to-be-reported quarter owing to higher traffic.
The improvement in the scenario concerning pilot staffing is likely to have resulted in an increase in block hours (a measure of aircraft utilization) in the second quarter of 2024 from the year-ago actuals. Operating expenses are, however, likely to have been high in the June quarter due to higher expenses on salaries, wages, and benefits. An increase in expenses on aircraft fuel following an uptick in oil price is also likely to have pushed up operating costs. The Zacks Consensus Estimate for aircraft fuel expenses is currently pegged at $25 million, suggesting an increase of 3.7% from second-quarter 2023 actuals.
Price Performance & Valuation
On a year-to-date basis, shares of SKYW have surged in excess of 57%, outperforming the industry and the likes of Delta Air Lines (DAL - Free Report) and United Airlines (UAL - Free Report) , for whom SKYW operates regional jets.
YTD Price Comparison
From a valuation perspective, SkyWest is trading at a discount compared to the industry going by its price/sales ratio. The company is trading at a forward sales multiple of 0.94 compared to its industry’s 0.99. The company has a Value Score of A. The reading is, however, above its median of 0.66 over the last five years.
Investor Considerations
SKYW's track record of successfully meeting the requirements of each of its airline heavyweight partners bodes well for the company. It is quite evident that the current production delays at plane manufacturer Boeing (BA - Free Report) have hurt the fleet-related plans of airline heavyweights in the United States. However, this supply-chain mess worked in favor of SkyWest and improved its pilot-staffing scenario.
Due to the Boeing-induced delivery delays, many major airlines have paused/slowed pilot hiring, which, in turn, slowed down the migration of employees from regional to mainline airlines. Some employees even returned to regional airlines like SKYW from major airlines in this scenario to save their jobs. This situation is aiding SKYW’s fleet utilization. As a result, SKYW’s top line is likely to have been in good shape. SKYW’s balance sheet also looks solid and is likely to gain in strength going forward.
Last Word
Given SKYW’s favorable valuation picture compared to its industry, upbeat passenger volumes, and improved picture with respect to fleet utilization, we believe investors should add SKYW stock to their portfolios ahead of its earnings release on Jul 25 for healthy returns. SkyWest’s current Zacks Rank supports our thesis.