Why You Should Retain JetBlue (JBLU) Stock in Portfolio Now
JetBlue Airways JBLU is benefiting from the buoyant air-travel-demand scenario and fleet-upgrade efforts. However, escalating fuel cost is worrisome.
Factors Favoring JBLU
Owing to strong passenger revenues, JBLU posted its second consecutive quarterly profit in the December quarter since the onset of the pandemic. In fourth-quarter 2022, operating revenues of $2,415 million climbed 31.68% year over year and beat the Zacks Consensus Estimate of $2,407.5 million. The double-digit year-over-year jump reflects improving air-travel demand.
With air-travel demand expected to remain strong in the March quarter as well, management expects total revenues to increase in the 32-35% range on a year-over-year basis. Total revenues for 2023 are forecast to increase year over year in the high single-digit to low double-digit range.
We are impressed by the company's efforts to modernize its fleet. In February 2022, JetBlue inked a firm order with Airbus which permitted it to add 30 more Airbus A220-300 aircraft to its order book. Debt-reduction efforts at JBLU are commendable as well.
A Key Risk
Escalating fuel costs pose a threat to JetBlue’s bottom line. Oil price is moving north primarily because of supply concerns due to Russia's invasion of Ukraine. In fourth-quarter 2022, average fuel price per gallon (including related taxes) climbed to $3.70 from $2.37 a year ago.Average fuel cost per gallon in the March quarter is estimated to be between $3.50 and $3.60.
Zacks Rank & Key Picks
Currently, JetBlue carries a Zacks Rank #3 (Hold).Some better-ranked stocks for investors interested in the Zacks Airline industry are:
Alaska Air Group ALK , being aided by the improved air-travel-demand situation, reported better-than-expected fourth-quarter 2022 results. The company expects a 29-32% increase in the top line in first-quarter 2023.
ALK has been increasing its capacity to meet the upbeat demand. Capacity is expected to increase 11-14% in the first quarter of 2023.
The Zacks Consensus Estimate for Alaska Air's current-year earnings has been revised upward by 7.5% in the past 60 days. ALK currently has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
United Airlines UAL, currently carrying a Zacks Rank of 2, is seeing steady recovery in domestic and leisure air-travel demand. On the back of upbeat air-travel demand, the stock was profitable in fourth-quarter 2022, which was the third consecutive profitable quarter at UAL.
Driven by solid demand, management expects total revenue per available seat mile to grow 22-23% year over year for the first quarter of 2023. Total revenues are anticipated to grow almost 51% year over year. The Zacks Consensus Estimate for current-year earnings has been revised upward by 7.9% in the past 60 days.
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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
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