5. SkyWest, Inc. (NASDAQ:SKYW)
Number of Hedge Fund Holders: 28
SkyWest, Inc. (NASDAQ:SKYW) is the holding company for SkyWest Airlines, a regional North American air carrier that offers scheduled passenger service for flights operated under code-share agreements with United Airlines, Delta Air Lines, Alaska Airlines, or American Airlines. Besides this, the company also offers chartered flights on-demand through its SkyWest Charter division. Moreover, its leasing company, SkyWest Leasing, leases aircraft and engines to third parties, which further enhances its revenue potential.
The company generated $867 million in revenue during Q2 2024, up 8% sequentially from the first quarter, and 19% higher year-over-year, driven by high demand, the strength of its partnerships, and ongoing improvements in staffing. Net income for the quarter was posted at $76 million, representing earnings per share of $1.82, which beat analysts’ expectations of $1.73 per share.
SkyWest, Inc. remains confident about the rest of the year and its outlook for 2025. It is anticipating a 9% to 11% increase in block hours compared to 2023, up from initial expectations of 7% to 9% at the end of Q1. The revised guidance has been driven by improving pilot availability, strong demand from the company’s partners, and increasing fleet utilization. GAAP EPS is forecast to be in the north of $6.
The airline is also committed to giving back to shareholders and has repurchased 10.9 million shares for $311 million since the beginning of 2024. It is also significantly reducing its debt, fueled by solid positive free cash flow. The company’s debt came down to $2.8 billion at the end of Q2, from $3 billion as of year-end 2023. It is on track to repay over $400 million debt in 2024.
These results have led to a bullish sentiment around the stock. Street analysts have a consensus on the stock’s Buy rating. Hedge funds are also encouraged by the company’s trajectory. ClearBridge Small Cap Value Strategy stated the following regarding SkyWest, Inc. (NASDAQ:SKYW) in its Q2 2024 investor letter:
We also added a new position in SkyWest, Inc. (NASDAQ:SKYW), a regional airline operator. The company reported strong quarterly earnings as its pilot attrition declines and fleet utilization improves. We believe that SkyWest continues to find opportunities to deploy capital in a value-accretive manner, acquiring more planes under long-term contracts. We think earnings should hold up in a potential recession and perhaps even improve further if major airlines reduce capacity and more pilots become available for SkyWest.
According to Insider Monkey’s database for Q2 2024, 28 hedge funds have investments in the company, making it one of the best airline stocks to buy according to hedge funds. SW Investment Management is the most dominant stakeholder in SkyWest, among hedge funds tracked by Insider Monkey, with holdings valued at $49.24 million, as of June 30, 2024.
