Leading carrier JetBlue Airways Corporation (JBLU) provides air passenger transportation services. The company has been struggling to stay afloat due to omicron-related travel restrictions. It recently launched service between New York’s John F. Kennedy International Airport and Puerto Vallarta’s Gustavo Diaz Ordaz International Airport, expanding its service to the Mexican Pacific Coast. In addition, it exercised its option to add 30 additional Airbus A220-300 aircraft to its order book, to deliver more robust cost performance.

However, the stock has been hit hard by rising oil prices due to the U.S. ban on Russian oil imports. It has lost 19.8% over the past month to close yesterday’s trading session at $12.74. In addition, it is currently trading 42% below its 52-week high of $21.96, which it hit on April 6, 2021. Also, analysts expect its EPS to decline at a rate of 126.4% per annum over the next five years. So, JBLU’s near-term prospects look uncertain.

Here’s what could influence JBLU’s performance in the upcoming months:

Lower-Than-Industry Valuation

In terms of forward P/S, JBLU’s 0.47x is 66.4% lower than the industry average of 1.40x. Likewise, its forward EV/S of 0.70x is 60.2% lower than the industry average of 1.76x. Moreover, the stock’s forward P/B and EV/EBITDA of 1.07x and 7.66x are higher than the industry averages of 2.57x and 11.24x, respectively.

Top Line Growth Doesn’t Translate into Bottom Line Improvement

For the fiscal fourth quarter ended December 31, 2021, JBLU’s revenue surged 177.3% year-over-year to $1.83 billion. However, its operating loss for the quarter came in at $119 million compared to $454 million in the previous year’s quarter. In comparison, its net loss came in at $129 million, compared to $373 million in the prior-year period. Its loss per share came in at $0.40, compared to $1.31 in the year-ago period.

Low Profitability

In terms of trailing-12-month gross profit margin, JBLU’s 14.74% is 49.5% lower than the industry average of 29.19%. Likewise, its trailing-12-month asset turnover ratio of 0.45% is 42.8% lower than the industry average of 0.78%. Moreover, the stock’s trailing-12-month ROCE, ROTC, and ROTA are negative compared to the industry averages of 13.68%, 6.85%, and 5.16%, respectively.

POWR Ratings Don’t Indicate Enough Upside

JBLU has an overall rating of C, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. JBLU has a C grade for Quality, in sync with its lower-than-industry profitability ratios.

The stock has a D grade for Momentum, consistent with its 30.9% loss over the past nine months and 36% decline over the past year. In addition, JBLU has a D grade for Stability, consistent with its beta of 1.39.

JBLU also has a C grade for Growth and Sentiment. This is justified as analysts expect its EPS to remain negative in the current quarter and year.

JBLU is ranked #14 out of 31 stocks in the F-rated Airlines industry. Click here to access all of JBLU’s ratings.

Bottom Line

JBLU is currently trading below its 50-day and 200-day moving averages of $14.58 and $15.37, respectively, indicating a downtrend. Moreover, it could keep losing in the near term due to service disruptions caused by omicron and high crude oil prices. So, it could be wise to wait for a better entry point in the stock.

How Does JetBlue Airways (JBLU) Stack Up Against its Peers?

JBLU has an overall POWR Rating of C, equating to a Neutral rating. There are no stocks in the Airlines industry with an A (Strong Buy) or B (Buy) rating. The other three industry participants, Air France-KLM SA (AFLYY), Qantas Airways Limited (QABSY), and SkyWest, Inc. (SKYW), are also rated C.

JBLU shares were trading at $12.70 per share on Friday afternoon, down $0.04 (-0.31%). Year-to-date, JBLU has declined -10.81%, versus a -10.80% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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