Simple Concepts Research Group

Here’s How Investors Are Assessing SkyWest (NASDAQ: SKYW)

by | Feb 11, 2022 | 52 Week Lows, Stock Picks

skywest skyw stock valuation

SkyWest (SKYW) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for SkyWest (SKYW) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

SkyWest Fundamentals

SKYW Stock Rating

Stock Price Target: $50.91

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for SkyWest in comparison to the Air Transport industry and the S&P 500.

SkyWest is a Small Cap company with a Market Cap of $2.15B.

How are investors using SkyWest earnings yield to assess the company?

SkyWest (SKYW)_ Earnings Yield in Comparison to the Air Transport Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for SkyWest is 18.90%, in comparison to 3.90% for the S&P 500 and 1.93% for the 10-year treasury bond. The median earnings yield for the Air Transport industry is 5.68%.

What does SkyWest Price-to-Earnings Ratio (P/E) tell investors about the company?

SkyWest (SKYW)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Air Transport Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

SkyWest is currently trading at a P/E of 15.01. The P/E for the Air Transport industry is not currently reported and the P/E for the S&P 500 is 25.66.

What is the current Price-to-Sales Ratio (P/S) for SkyWest?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

SkyWest is currently trading at a P/S of 0.61. The P/S for the Air Transport industry is 1.03 and the P/S for the S&P 500 is 2.98.

How does SkyWest Price-to-BookRatio (P/B) compare to the Airline Transport industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

SkyWest P/B ratio is not currently reported. The P/B for the Air Transport industry is 3.71 and the P/B for the S&P 500 is 4.58.

How attractive is SkyWest Return on Invested Capital (ROIC) to investors?

SkyWest (SKYW)_ Return on Invested Capital in Comparison to the Air Transport Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

SkyWest ROIC is currently 2.21% in comparison to -6.16% for the Air Transport industry and 9.10% for the S&P 500.

SkyWest (SKYW)_ Price Target & 52-Week Price Range

How has SKYW stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, SkyWest has traded between the range of $29.11 and $61.15.

The current Analyst Price Target for SkyWest is $50.91.

What is SkyWest YOY Performance in comparison to its industry and the total market?

The YOY performance for SkyWest is -26.77%. The Air Transport industry has a YOY performance of -0.90% in comparison to the YOY S&P 500 performance of 15.03%.

SkyWest SKYW)_YOY Performance in Comparison to the Air Transport Industry and the S&P 500 (1)

Recent Financial Results

  • Q4 2021 Pre-tax income of $5M, net income of $4M
  • Full year 2021 pre-tax income of $151M, net income of $112M
  • Full year 2021 adjusted pre-tax income of $235M, adjusted net income of $176M
  • Reported $860M in cash and marketable securities at December 2021, up from $826M in December 2020
  • Total debt in December 2021 was $3.1B, down from $3.2B at December 2020

Stock Price Target: $50.91

Company Overview

SKYW Stock Rating

SkyWest operates a regional airline in the United States. The company operates through two segment, SkyWest Airlines and SkyWest Leasing. It also leases regional jet aircraft and spare engines to third parties. As of December 2020, the company’s fleet consisted of 601 aircraft; and provided scheduled passenger and air freight services with approximately 1,700 total daily departures to various destinations in the US, Canada, Mexico, and the Caribbean. In addition, it provides airport customer and ground handling services for other airlines.

SkyWest, Inc. was incorporated in 1972 and is headquartered in St. George, Utah. The current CEO is Chip Childs.

Be sure to add SkyWest (SKYW) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.