JetBlue (JBLU) reported earnings this week, and the numbers were impressive.
Net income came it at $190 million; in the year-ago quarter, it posted a mere $88 million. For the full year, net income was up 50%, from $401 million last year to $677 million this year.
Ater the news, the stock sold off 6%.
It’s down to its December lows again, which seems odd for a company that blew the doors off the last quarter of the year, even including a $33 million loss on fuel hedging positions — it had purchased fuel in the futures market at a higher price than the current (spot) price of fuel.
Also ignored was the fact that JetBlue doesn’t have any fuel hedges in play for the next quarter or two, so it should benefit even more from cheap fuel prices.
Add to that JetBlue stock beat earnings estimates of 51 cents per share, reporting 56 cents per share for the quarter. One possibility is that the numbers don’t take into account the flights that were cancelled because of the winter storm last week. That may explain why all this good news was tempered with serious selling.
JBLU Struggling With West Coast Expansion Plans
Another thing that’s been hanging over JBLU’s head is its inability to create a solid hub on the West Coast. Its current hub is Long Beach Airport (LGB), which doesn’t even have a customs section. That means it can’t help with international flights, although LGB said it’s working on expanding into an international airport.
The problem is, most of the competition flies out of Los Angeles International Airport (LAX), which means when prospective fliers are typing in their airport search, Long Beach doesn’t show up. To get its foot in the door, JBLU has been running popular routes at a loss to gain market share, and that has some analysts concerned.
However, JBLU is doing well everywhere else and has some new routes opening that should prove very profitable. It’s opened a flight to Cuba from New York and added two new routes among Orlando-Fort Lauderdale-Albany, which is a major snowbird route.
A weak economy also plays well for JetBlue stock since businesses will be looking to run lean and won’t be as willing to spend up for business class accommodations on full-fare airlines. The enterprise business person is a very healthy market for JBLU.
The point is, JetBlue stock is cheap here. The selloff today, and the weakness in December, are not warning signs. They are great opportunities to buy JetBlue stock at a good price.
In its earnings report, JBLU struck a positive view of the new year. With capacity expected to increase 14%-16% in Q1 of this year, plus recent low fuel prices, there’s a lot of clear sky above for JetBlue stock.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
