Earnings Miss: SkyWest, Inc. Missed EPS By 27% And Analysts Are Revising Their Forecasts
It's been a pretty great week for SkyWest, Inc. (NASDAQ:SKYW) shareholders, with its shares surging 13% to US$29.45 in the week since its latest first-quarter results. Results overall were not great, with earnings of US$0.59 per share falling drastically short of analyst expectations. Meanwhile revenues hit US$730m and were slightly better than forecasts. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for SkyWest
Taking into account the latest results, the current consensus, from the six analysts covering SkyWest, is for revenues of US$2.08b in 2020, which would reflect a concerning 30% reduction in SkyWest's sales over the past 12 months. Statutory earnings per share are expected to plunge 75% to US$1.38 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$2.44b and earnings per share (EPS) of US$2.10 in 2020. It looks like sentiment has declined substantially in the aftermath of these results, with a substantial drop in revenue estimates and a large cut to earnings per share numbers as well.
Despite the cuts to forecast earnings, there was no real change to the US$41.00 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on SkyWest, with the most bullish analyst valuing it at US$55.00 and the most bearish at US$26.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One more thing stood out to us about these estimates, and it's the idea that SkyWest'sdecline is expected to accelerate, with revenues forecast to fall 30% next year, topping off a historical decline of 0.6% a year over the past five years. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 21% next year. So while a broad number of companies are forecast to decline, unfortunately SkyWest is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for SkyWest. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple SkyWest analysts - going out to 2022, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for SkyWest you should know about.
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