Jetblue Airways Corp

NASDAQ:JBLU   3:59:59 PM EDT
13.42
-0.11 (-0.81%)
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Why JetBlue Is Winning. Period.




##Symbol##JBLU


JetBlue Airways Corporation (JBLU)
20.8235 +0.5935 (2.93%)
Sector: Transportation
Published by Capital Market Laboratories on 2015-06-22

What does this rating mean?
STOCK RETURNS
3Mo: +7.5%   |   6Mo: +35.5%  |  12Mo: +97.9%

TECHNICAL RATING
10DMA: $19.5  |  50DMA: $20.4  |  200DMA: $16.1
What does this rating mean?

OPTIONS
30-day Implied Volatility: 33.5%
Implied Stock Range: ($19.20, $22.40)
What does "implied stock" mean?


Fundamentals

JetBlue is a remarkable airline. The stock has outperformed Southwest Airlines (LUV), Delta (DAL), American (AAL), United (UAL), and Virgin America (VA) over the last six-months, returning over 35% while all of the other peers listed are down in that same time period. The company is moving with the competitive nature of the industry by upgrading its fleet from the smaller 100-150 passenger planes to the 190-seat Airbus A321 model which have a lower unit cost. Further, the firm is rolling out its "fare families" program that unbundles ammenities like one free checked bag and high speed Wi-Fi.

The company has a history of innovation. It was the first airline to roll out cable (satellite) televisions for every seat. Revenue and earnings are exploding to all-time highs and every core fundamental measure is rising.

Technicals   |   Support: 18.87   |   Resistance: 21.83   

Swing Death Cross Alert: The short-term 10 day MA is now below the 50 day MA.

JBLU has a four bull (top rated) technical rating because, while it is trading above its 10-, 50- and 200- day moving averages and the stock is up on the day, the 10-day MA is now below the 50-day MA.


Here are the consensus estimates for next quarter. Note that last quarter's actual result is included at the far right.
EARNINGS ESTIMATES
Earnings Date EPS Revenue (Mean) Revenue (Median) Last Quarter (Actual)
2015-07-23 $0.45 $1,626.4 M $1,630.7 M $1,523.0 M Provided by ZACKS


Let's look at the core elements that drive the company's fundamental rating.


Fundamentals Rating Summary



METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Revenue (TTM US$ Millions) 5,991 5,491 5,078

Operating Margin (QTR) 1.191 1.03 1.05 RISING

Net Income (TTM US$ Millions) 534 158 112 RISING

Levered Free Cash Flow (TTM US$ Millions) 218 -116 -213 RISING

Capital Expenditures (TTM US$ Millions) 835 744 726 RISING





Stock Returns and Chart

JBLU is up +7.5% over the last three months and up +35.5% over the last six months. The stock price is up +97.9% over the last year. Note the four "bull" technical rating indicating that the stock shows near-term strength technically and may be a few steps away from a technical upside breakout.

Before we dig into the fundamental trends that drive the rating, let's look at a two-year stock chart with regression channel and 10-day momentum (on the bottom).
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Now let's examine the visualizations of the critical financial measures.



METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Revenue (TTM US$ Millions) 5,9915,4915,078


Revenue (TTM) is trending higher meaning that it has increased for at least five consecutive quarters (in this case twenty consecutive quarters).

Revenue over the trailing twelve months hit just under $6 billion up from $5.5 billion a year ago, or a 9% rise. The two-year change in revenue an 18% rise.

Let us note that while oil prices have fallen, the earnings benefit to JBLU is not only from oil prices but in fact growing revenue. What do all these numbers mean?
JBLU's fundamental rating benefited these results:
1. The one-year change was positive (but no extra points were given for a large percentage increase).
2. The two-year change was positive.
Finally, the up trend (consecutive quarters) in revenue benefited the fundamental (star) rating.

Let's look at Revenue (TTM US$ Millions) in the chart below.


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Tale of the Tape



Before we jump into net income and free cash flow analysis, let's take a quick look at JBLU versus two of its peers in particular (LUV and VA). We'll examine one image but across nine distinct metrics.


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We need to take this image row by row. Across the top we can see that LUV is considerably larger than JBLU (and VA) in terms of revenue and earnings. I do note, however, that JBLU shows the revenue per employee ($ millions) than the peer group.

Across row two we start to see the uniqueness of JBLU, as the airline shows higher gross margins and net income margins than the other two peers.

Finally, across row three we see some fantastic results. First, JBLU is growing its revenue notably faster than LUV and VA. Second, the firm is growing earnings considerably faster. Finally, and perhaps most interesting, JBLU has a substantially lower price to sales than LUV. This hits on a specific note surrounding valuation.
METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Net Income (TTM US$ Millions) 534158112RISING


Let's dive back in JBLU's specifics, this time earnings (net income). Net Income over the trailing twelve months (TTM) for JBLU is rising and has broken a new all-time high to over half a billion dollars. That's a 238% rise year-over-year.

In our next chart we plot Net Income (TTM US$ Millions) in the blue bars and the quarterly results in the gold line.


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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Levered Free Cash Flow (TTM US$ Millions) 218-116-213RISING


Levered Free Cash Flow (FCF) (TTM US$ Millions) is a critical determinant of stock price since market cap is the present value of all future free cash flows. It has long been noted that JBLU has not been able to turn positive FCF. But, finally, the firm has turned that corner. For JBLU the metric is rising (it was -$116 million last year). For the most recent trailing-twelve-months the company reported Levered Free Cash Flow (TTM US$ Millions) of $218 million (positive).

This cash metric is up $431 million from $-213 million two-years ago.

For our next chart we plot Levered Free Cash Flow (TTM US$ Millions) in the blue bars through time.



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METRIC CURRENT 1YR AGO 2YR AGO DIRECTION
Capital Expenditures (TTM US$ Millions) 835744726RISING


The last metric we'll focus on is Capital Expenditures (CapEx) (TTM US$ Millions). As we stated earlier in the introduction, JBLU is making the move to upgrade its fleet to more profitable (and larger) planes. We can see the steady increase in CapEx for the firm in the chart below. In the most recent TTM JBLU spent $835 million, up 12% from last year's value of $744 million and up 15% from two-years ago ($726 million).

In our final time series chart we plot Capital Expenditures (TTM US$ Millions) in the blue bars.


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Summary
It's a simple question, really. Why is JBLU crushing its peers in stock price? It's a simple answer, really. JBLU is innovating, growing revenue and earnings faster than its pers while maintaining higher gross margins and net income margins. JBLU is winning. Period.