There's been a notable change in appetite for SkyWest, Inc. (NASDAQ:SKYW) shares in the week since its yearly report, with the stock down 13% to US$55.17. Results were roughly in line with estimates, with revenues of US$3.0b and statutory earnings per share of US$6.62. Following the result, 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the eight analysts covering SkyWest are now predicting revenues of US$3.13b in 2020. If met, this would reflect a credible 5.4% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to reduce 4.7% to US$6.36 in the same period. Before this earnings report, analysts had been forecasting revenues of US$3.07b and earnings per share (EPS) of US$6.67 in 2020. So it's pretty clear consensus is mixed on SkyWest after the latest results; while analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.
The consensus price target was unchanged at US$75.00, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic SkyWest analyst has a price target of US$83.00 per share, while the most pessimistic values it at US$68.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
Further, we can compare these estimates to past performance, and see how SkyWest forecasts compare to the wider market's forecast performance. One thing stands out from these estimates, which is that analysts are forecasting SkyWest to grow faster in the future than it has in the past, with revenues expected to grow 5.4%. If achieved, this would be a much better result than the 0.6% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.9% per year. So while SkyWest's revenues are expected to improve, it seems that analysts are expecting it to grow at about the same rate as the overall market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. 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.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple SkyWest analysts - going out to 2022, and you can see them free on our platform here.
You can also see whether SkyWest is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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