KIEV, UKRAINE – 2019/06/08: In this photo illustration the JetBlue Airways logo is seen displayed on … [+]
The shares of JetBlue Airways (NASDAQ: JBLU) currently trade 30% lower than pre-Covid levels as compared to a 13% decline in Southwest Airlines stock (NYSE: LUV). JetBlue incurred just $683 million of operating cash burn last year which is much lower than the $2 billion drop in market capitalization since February 2020. Also, the third phase of the payroll support program restricts airline companies from returning capital to investors as dividends and share repurchases until September 2022. Therefore, considering JetBlue’s consistent revenue growth before the pandemic, comparable profitability to Southwest Airlines, and strong balance sheet, Trefis believes that the stock is a good value investment. We compare the historical trends in revenues, margins, and valuation multiple of both companies in an interactive dashboard analysis, Southwest Airlines vs JetBlue Airways: Industry Peers; Which Stock Is A Better Bet?– parts of which are highlighted below.
1. Revenue Growth
JetBlue’s growth has been a bit higher than Southwest Airlines before the pandemic, with JetBlue’s revenues expanding at an average rate of 7% from $6.6 billion in 2016 to $8 billion in 2019, versus Southwest’s revenues which grew at an annual rate of 3.4% from $20.2 billion in 2016 to $22.4 billion in 2019. With the pandemic bringing the travel & tourism industry to a grinding halt, both companies reported a 60% (y-o-y) top-line contraction in 2020.
2. Returns (Profits)
Southwest’s operating profit margin is slightly better than JetBlue Airways. By negating the impact of non-cash charges, the operating cash flow margin is almost similar at 18%.
Both companies have sizably low long-term debt obligations primarily due to the government’s assistance during the pandemic and consistent growth in air travel demand. Per recent filings, JetBlue reported $3.7 billion of cash & investments against total debt of $4.4 billion. Moreover, Southwest’s cash & cash equivalents stand taller than its long-term debt obligations.
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Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company’s products, that you
Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company’s products, that you touch, read, or hear about everyday, impact its stock price. Surprisingly, the founders of Trefis discovered that along with most other people they just did not understand even the seemingly familiar companies around them: Apple, Google, Coca Cola, Walmart, GE, Ford, Gap, and others. This might include you though you may have invested money in these companies, or may have been working with one of them for years as an employee, or have consulted with them as an expert for a long time. You can play with assumptions, or try scenarios, as-well-as ask questions to other users and experts. The platform uses extensive data to show in a single snapshot what drives the value of a company’s business. Trefis is currently used by hundreds of thousands of investors, company employees, and business professionals.