5. SkyWest, Inc. (NASDAQ:SKYW)
Average Analyst Price Target Upside as of September 20: 19.06%
PE Ratio (FWD) as of September 20: 11.88
Number of Hedge Fund Holders: 28
SkyWest, Inc. (NASDAQ:SKYW) operates as a regional airline in the U.S., managing a diverse portfolio that includes SkyWest Airlines, SkyWest Charter, and SkyWest Leasing. With a fleet of around 500 aircraft, it connects travelers to more than 240 destinations across North America. The airline has established partnerships with major carriers such as United Airlines, Delta Air Lines, American Airlines, and Alaska Airlines, which enables it to serve over 38 million passengers in 2023 alone.
In addition to its scheduled passenger services, the company offers charter options through its SkyWest Charter division, which provides flexible travel solutions for businesses and groups that require tailored flight schedules. Additionally, the company leases aircraft to other operators through SkyWest Leasing, which enhances its revenue potential.
SkyWest (NASDAQ:SKYW) was held by 28 hedge funds in the second quarter and the stakes amounted to $196.217 million. SW Investment Management is the most dominant shareholder of the company and has a position worth $49.242 million as of Q2.
It is one of the cheap transportation stocks to buy according to analysts on our list. The stock has a consensus Buy rating among 4 analysts, and its average price target of $97.50 represents an upside of 19.06% from current levels. Moreover, analysts expect a massive growth of nearly 800% in the company’s EPS growth in 2024.
In the second quarter, the company reported a GAAP EPS of $1.82, which topped expectations by $0.09. Revenue of $867 million jumped 19.4% year-over-year and surpassed estimates by $40.4 million.
Since the start of 2023, SkyWest (NASDAQ:SKYW) has repurchased approximately 10.9 million shares, representing about 21.5% of its outstanding shares, at a total cost of $311 million and an average price of $28.54 per share. It shows that the company is committed to returning value to shareholders. Furthermore, it reduced its debt to $2.8 billion by the end of the second quarter, down from $3 billion at the end of 2023, with plans to pay off over $400 million in debt in 2024.
The company has also made significant strides in modernizing its fleet to boost operational efficiency and improve passenger comfort. By focusing on acquiring newer aircraft with advanced technology and fuel-efficient engines, it is positioning itself for sustainable growth. In Q2 alone, the company received eight of the 20 United Finance E175 aircraft, adding to its ongoing fleet expansion, with 19 more new aircraft set to arrive at the end of the year.
SkyWest (NASDAQ:SKYW) expects to increase its pilot workforce to over 5,000 by year-end, up approximately 1,000 pilots from the end of 2023. The growth in personnel, combined with a favorable captain balance, is expected to lead to a 9% to 11% increase in block hour production during the second half of the year.
