JetBlue Airways (JBLU) reported its second-quarter results Tuesday, featuring a pleasant surprise on the bottom line. The earnings beat sent shares climbing 18% higher so far this morning.
The company delivered a profit of $25 million or 8 cents a share, which was well below its performance this time last year of $138 million or 41 cents a share. However, Wall Street was expecting a loss of 10 cents a share.
Revenue struggled in the second quarter as well, down nearly 7% to $2.43 billion but still narrowly ahead of the $2.4 billion consensus.
JetBlue’s CFO Ursula Hurley expects the airline to bring in as much as $900 million in additional earnings before interest and taxes between 2025 and 2027.
Part of this will be the result of a strategic move to defer $3 billion in planned aircraft spending projects through 2029, which will enhance profits even further. The company also ceased operations in 15 cities and 50 routes that proved to be unprofitable.
Hurley went on to say that the company is on the road to financial recovery with its balance sheet in a better position now. The priority for JetBlue will be using its existing asset base to drive value, and subsequently, create positive free cash flow.
The rally we’re seeing today will only strengthen the JBLU price trend through 2024 thus far. The stock has climbed nearly 27% YTD. So, should you jump on the momentum and buy JBLU?
We’ve taken a closer look at this opportunity in the VectorVest stock analysis software and found 3 things you need to see before you make your next move one way or the other.
JBLU Still Has Poor Upside Potential and Safety, But Excellent Timing Earn it a BUY
VectorVest is a proprietary stock rating system that saves you time and stress while helping you win more trades. It does this by taking complex technical indicators and fundamental data and distilling everything you need to know into 3 simple ratings.
These are relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy.
Better yet, you’re given a clear buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating. Here’s what we discovered for JBLU:
- Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection), AAA corporate bond rates, and risk. It’s a much better indicator than the typical comparison of price to value alone. The RV rating of 0.75 is poor for JBLU.
- Poor Safety: The RS rating is a risk indicator. It’s derived from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 0.69 is poor for JBLU.
- Excellent Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s taken day over day, week over week, quarter over quarter, and year over year to paint the full picture for investors. This is where things get interesting because JBLU has an excellent RT rating of 1.40.
The overall VST rating of 1.04 is considered just fair, but VectorVest rates JBLU a BUY as the stock continues to climb higher. Don’t make your next move just yet, though - dig a bit deeper with this free stock analysis and set yourself up for a successful trade without any stress, uncertainty, or emotion!
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VectorVest advocates buying safe, undervalued stocks, rising in price. JBLU posted a surprise profit that has shares climbing higher, despite falling short of last year’s performance on both the top and bottom lines. The stock itself may have poor upside potential and safety, but excellent timing earns this stock a buy today.
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