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wrldtvlr
Topic Author
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Joined: Thu Jan 26, 2012 10:52 pm

JetBlue Stock Price

Wed Apr 25, 2012 6:55 pm

I've searched recent threads and didn't see a topic already discussed.

I watch airline stocks daily and have been wondering for some time why B6 stock price is either stagnating or trending downward when all other have been inching upward. According to news reports, B6 will beat the Street estimates by .04 cents in the previous quarter, and an overwhelming majority of analysts giving B6 an "outperform" rating.

So why does B6 stock continue to flounder?
 
flyby519
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RE: JetBlue Stock Price

Wed Apr 25, 2012 7:21 pm

Because analysts hate anyone who adds capacity to the market right now.
 
stlgph
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Joined: Tue Oct 12, 2004 4:19 pm

RE: JetBlue Stock Price

Wed Apr 25, 2012 7:27 pm

jetBlue is lacking a few things for a 'go long'

1. M&A
2. Expansive route map
3. Still behind in a preponderance of business travelers compared to other carriers
4. Limitations at JFK/Laguardia
5. Too much of the same "schtick" over and over again
if assumptions could fly, airliners.net would be the world's busiest airport
 
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LAXintl
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RE: JetBlue Stock Price

Wed Apr 25, 2012 7:40 pm

JetBlue financially has been a mediocre performer.

Its has continued to grow slowly in scale over the years, but its earnings have not shown the same growth. In other words, the airline today brings in about double the revenue it did 5-years ago, but earnings are essentially the same. Its earnings simply have not kept up with the growth of the enterprise.

The return on cash has been also negative at JBLU as they have invested tons of dollars in growth and new fleet, however all that activity is not earning any more profit in return. Would have been better from a finance point of view to sit on that pile of money and not spend it.

Since 2008 the stock has been a flat line essentially, and one which many analysts have questioned management about.

[Edited 2012-04-25 12:45:16]
From the desert to the sea, to all of Southern California
 
ScottB
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Joined: Fri Jul 28, 2000 1:25 am

RE: JetBlue Stock Price

Wed Apr 25, 2012 8:50 pm

Quoting LAXintl (Reply 3):
JetBlue financially has been a mediocre performer.

Its has continued to grow slowly in scale over the years, but its earnings have not shown the same growth.

That is the core issue. Earnings have not kept up with expectations from when the company IPO'ed (and shortly thereafter). They also missed on earnings twice last year, and Wall Street tends to punish share prices for that. But the P-E (price-to-earnings) ratio is above 16, and that's middle-of-the-road compared to their peers.
 
wrldtvlr
Topic Author
Posts: 50
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RE: JetBlue Stock Price

Wed Apr 25, 2012 9:41 pm

Thanks for the replies. I've been a lurker here for years and am just now getting my feet wet in posting.
 
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yellowtail
Posts: 3938
Joined: Fri Jun 17, 2005 3:46 am

RE: JetBlue Stock Price

Wed Apr 25, 2012 9:48 pm

Quoting LAXintl (Reply 3):
Its has continued to grow slowly in scale over the years, but its earnings have not shown the same growth. In other words, the airline today brings in about double the revenue it did 5-years ago, but earnings are essentially the same. Its earnings simply have not kept up with the growth of the enterprise.

Well if they keep adding low yield SJU stuff it will not help their cause. They need to turn their sights on more VFR based traffic (like they have down in KIN) which is higher yielding that leisure. Places like GUA, SAL etc.

If they don't WN will beat them to those markets. Of that I have no doubt.
When in doubt, hold on to your altitude. No-one has ever collided with the sky.
 
AADC10
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RE: JetBlue Stock Price

Thu Apr 26, 2012 7:29 am

Quoting wrldtvlr (Thread starter):
So why does B6 stock continue to flounder?

JBLU has a relatively rich valuation with about a 16 P/E ratio. UAL is around 10 and DAL is around 8. The others are inching up from their low post bankruptcy valuation while JBLU is a faded market darling.

Even though JBLU has not climbed, it is still more expensive than any legacy carrier, although it trades at a discount to LUV..
 
stlgph
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RE: JetBlue Stock Price

Thu Apr 26, 2012 11:28 am

Quoting AADC10 (Reply 7):
Even though JBLU has not climbed, it is still more expensive than any legacy carrier, although it trades at a discount to LUV..

????
in after hours trading-
JBLU closed at $3.90 yesterday
UAL closed at $21.33
DAL closed at $10.12
LUV closed at $7.74
ALGT closed at $59.90
SAVE closed at $23.04
RJET closed at $5.00
LCC closeed at $9.14

JetBlue's stock has been trading lower than other carriers, with the exception of RJET for some time.

[Edited 2012-04-26 04:48:44]
if assumptions could fly, airliners.net would be the world's busiest airport
 
aeroblogger
Posts: 1397
Joined: Tue Dec 20, 2011 5:53 am

RE: JetBlue Stock Price

Thu Apr 26, 2012 11:37 am

Quoting stlgph (Reply 8):

JetBlue's stock has been trading lower than other carriers, with the exception of RJET for some time.

It is one of the most expensive in terms of P/E valuation, not share price.
#AvGeek
 
stlgph
Posts: 11317
Joined: Tue Oct 12, 2004 4:19 pm

RE: JetBlue Stock Price

Thu Apr 26, 2012 11:49 am

Quoting aeroblogger (Reply 9):

Somewhat, yes, but if you're into after hours trading or pre market trading, you can get it for $3.90 right now.
It should open today on the markets hovering around $4.64
if assumptions could fly, airliners.net would be the world's busiest airport
 
rfields5421
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Joined: Thu Jul 19, 2007 12:45 am

RE: JetBlue Stock Price

Thu Apr 26, 2012 1:42 pm

Stock price has only minimal linked to how well the company is actually doing. Stock prices are speculations on how the stock price will move in the future. They are not a reflection of how well the company is being run, how well it is doing financially. The big investors can make just as much, if not more, money from a falling stock price as from a rising stock price.

Quoting wrldtvlr (Thread starter):
wondering for some time why B6 stock price is either stagnating or trending downward when all other have been inching upward.

No airline stock has been doing well enough for the average investor to put money into. Only institutional investors who make massive trades on price moves of a few cents will be dealing in those stocks.

Quoting ScottB (Reply 4):
They also missed on earnings twice last year, and Wall Street tends to punish share prices for that.

Wall Street will punish the stock for two to three years for missing earnings a couple quarters. A company which misses earning predictions by a penny a share is just as bad as a company which misses earnings by a dollar.

Note - missing earning predictions by making too much profit as just as bad as missing earning preditions by not earning enough. Wall Street analysts might miss the earning predictions - but the company predictions have to be very close. Otherwise Wall Street views that as the company leadership really does not know what is happening within their own company.
Not all who wander are lost.
 
ScottB
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Joined: Fri Jul 28, 2000 1:25 am

RE: JetBlue Stock Price

Thu Apr 26, 2012 2:18 pm

Quoting rfields5421 (Reply 11):
Note - missing earning predictions by making too much profit as just as bad as missing earning preditions by not earning enough. Wall Street analysts might miss the earning predictions - but the company predictions have to be very close.

That's not entirely true. An upside surprise of 10 cents a share frequently results in a nice increase in the share price. AAPL always lowballs its earnings estimates and blew the analyst consensus out of the water this week -- and the share price went up 50 bucks or so.

Quoting rfields5421 (Reply 11):
Wall Street will punish the stock for two to three years for missing earnings a couple quarters. A company which misses earning predictions by a penny a share is just as bad as a company which misses earnings by a dollar.

   Missing for one quarter might just be viewed as a blip, but missing for two quarters raises red flags that there might be a pattern.

Quoting stlgph (Reply 8):
JetBlue's stock has been trading lower than other carriers, with the exception of RJET for some time.

Absolute share price is meaningless without taking into account the value in earnings potential and book value per share. DAL's share price is half of UAL's, but there are over two-and-a-half times as many shares of DAL on the market, making DAL a more valuable company.
 
stlgph
Posts: 11317
Joined: Tue Oct 12, 2004 4:19 pm

RE: JetBlue Stock Price

Fri Apr 27, 2012 1:00 pm

"Buy in May and go away" ... shares of jetBlue have been raised from sell to hold by several analysts.

Estimated full year EPS of $.45
if assumptions could fly, airliners.net would be the world's busiest airport
 
AADC10
Posts: 1511
Joined: Sat Nov 13, 2004 7:40 am

RE: JetBlue Stock Price

Fri Apr 27, 2012 6:56 pm

Quoting stlgph (Reply 8):
JetBlue's stock has been trading lower than other carriers, with the exception of RJET for some time.

The market cap of the company is share priceXnumber of shares. The dollar value of a share is not necessarily indicative of the value of the company, although it was common to try to keep the share price between $10 and $50 through stock splits to make round lots of 100 more affordable. These days it is less important.

LUV at $7.74 has a greater market captizalization than UAL at $21.33 and DAL at $10.12 combined, mostly because LUV is split up into a much larger number of shares. JBLU has been holding up reasonably well in the face of rising fuel costs, which tend to run counter to airline stocks. UAL and DAL rose due to their turn to profitability (the normally slow Q1 not withstanding) and in anticipation of further merger benefits. AMR of course zoomed down to almost nothing as they headed to Ch. 11 and there was probably some assumption that competitors would gain at AA's expense during Ch. 11 but since all of the other legacies had already been there, Ch. 11 is just another part of running an airline.

There are many other ways to value companies but P/E ratio is common when comparing companies in the same industry but of different size. You could compare companies of similar size using market cap, PEG ratio or any number of other measures. However, the stock price is supposed to be reflective of anticipated earnings. B6's growth has slowed as the low hanging fruit has been picked and they are facing more competition on some routes. They have also gotten some bad press recently. However, it is a mistake to link value with stock price.

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