Here's Why You Should Retain JetBlue Airways (JBLU) Stock Now
JetBlue Airways’ JBLU dedication to fleet modernization and debt reduction is admirable, suggesting encouraging developments. However, considerable challenges posed by escalating labor and fuel costs are concerning.
Factors Favoring JBLU
JetBlue's fleet modernization is impressive, including the introduction of the Airbus A321neo and the launch of transatlantic service to London. Expanding Mint service from Newark adds to success, with expected savings of $75 million by 2024.
JBLU’s commitment to reducing its debt is promising. With its long-term debt-to-capital ratio (which measures the financial leverage of a firm) currently at 52.2%, lower than the industry average of 65.5%, the company demonstrates a strong financial standing.
JetBlue expanded its network with daily non-stop flights between Boston and Amsterdam starting September 2023. This follows the success of its New York to Amsterdam service launched in August 2023. Passengers on the Boston-Amsterdam route will enjoy JetBlue's award-winning Mint service. With international air travel picking up, this move reflects prudent management by JBLU.
Key Risks
JetBlue Airways’ bottom line is impacted by rising labor costs, driving up operating expenses by 4.1% in 2023. Specifically, salary, wages and benefits surged by 11.4%. Management expects non-fuel unit costs for 2024 to rise in the mid-to-high single-digit range compared to 2023.
JBLU's fourth-quarter 2023 results showed a loss compared to earnings in the previous year, attributed to low revenues and high costs. Passenger revenues, which account for 93.2% of total revenues, declined from $2.27 billion to $2.17 billion due to air traffic control issues in the Northeast.
Rising fuel costs are negatively impacting the airline's bottom line. The increase in crude prices is attributed to Saudi Arabia and Russia extending production cuts through Dec 31, 2023. JBLU's management forecasts first-quarter 2024 fuel costs per gallon in the range of $2.93-$3.03.
Zacks Rank
JBLU currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Investors interested in the broader Transportation sector may consider stocks like GATX Corporations GATX and SkyWest SKYW. Each stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GATX has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.
The Zacks Consensus Estimate for 2024 earnings has been revised 5.17% upward over the past 90 days. The company has an expected earnings growth rate of 6.5% for 2024. Shares of GATX have rallied 23% in the past year.
SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 26% over the past 90 days. Shares of SkyWest have surged 235% in the past year.
SKYW has an expected earnings growth rate of more than 100% for 2024. The company delivered a trailing four-quarter earnings surprise of 128.02%, on average.
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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
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