Here's Why Investors Should Retain JetBlue (JBLU) Stock Now
JetBlue Airways Corporation JBLU is benefiting from low debt and strong air-travel demand. However, low liquidity is worrisome.
Factors Favoring JBLU
JetBlue is being aided by the recovery in air-travel demand. Driven by high passenger revenues (up 18.9%), total revenues jumped 18.1% year over year in the first half of 2023. Total revenues for 2023 are anticipated to register year-over-year rise of 6-9%.
In response to an increase in air-travel demand, JBLU is expanding its network. From September, JetBlue started operating daily non-stop flights connecting Boston and Amsterdam. The launch of this new route follows the success of JBLU’s Amsterdam service from New York, which was introduced on Aug 29.
Passengers on the Boston-Amsterdam route will enjoy the low-carrier’s award-winning Mint service apart from other facilities. JetBlue’s Airbus A321 Long Range aircraft will operate on the route. With international air-travel bouncing back, we believe that the decision to add an additional route to the network is a prudent move by JBLU’s management.
JetBlue’s efforts to reduce its debt load is encouraging. Total debt at the end of the June quarter was $3,757 million compared with $3,647 million at 2022 end. During the quarter, JBLU paid off $200 million of debt and finance lease obligations.
Key Risks
JetBlue’s current ratio (a measure of liquidity) is currently pegged at 0.57 at the end of second-quarter 2023. A current ratio of less than 1 is not desirable as it implies that the company doesn't have enough liquid assets to cover its short-term liabilities.
Zacks Rank
JBLU currently carries Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks for investors interested in the Zacks Transportation sector are GATX Corporation GATX and Triton International Limited TRTN.
GATX, which presently carries a Zacks Rank #2 (Buy), has strengthened its railcar leasing operations. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For third-quarter and full-year 2023, GATX’s earnings are expected to register 36.6% and 14.3% growth, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2, is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. Its current ratio (a measure of liquidity) was 3.83 at the end of second-quarter 2023. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
GATX Corporation (GATX) : Free Stock Analysis Report
Triton International Limited (TRTN) : Free Stock Analysis Report
