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Why Is SkyWest (SKYW) Up 77.1% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for SkyWest (SKYW). Shares have added about 77.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is SkyWest due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Earnings  Miss at SkyWest in Q1

The company’s earnings of 59 cents per share missed the Zacks Consensus Estimate of 88 cents. Also, the bottom line deteriorated 55.64% on a year-over-year basis primarily due to fall in demand in March 2020 stemming from the COVID-19 outbreak.

Quarterly revenues came in at $729.9 million, which beat the Zacks Consensus Estimate of $690 million. Moreover, the top line increased marginally year over year due to inclusion of 16 E175 aircrafts since first-quarter 2019. Revenues from flying agreements (contributing 97.2% to the top line) inched up 1.35% from the year-ago quarter’s figure. Total expenses rose 5.8% to $663.6 million due to higher aircraft maintenance, materials and repairs as well as depreciation and amortization costs.

The carrier reported a 2.2% increase in block hours (a measure of aircraft utilization) during the reported quarter. Passenger load factor (percentage of seats filled by passengers) deteriorated 11.1 percentage points to 67.5% in the reported quarter due to shrink in air travel demand thanks to the pandemic.

The company exited the quarter with cash and marketable securities of $578 million, up from $520 million at 2019 end.  Long-term debt (net of current maturities) fell 3.8% year over year to $2.5 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -1118.75% due to these changes.

VGM Scores

Currently, SkyWest has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise SkyWest has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.



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