Ally Schmidt

On July 15, 2016, JetBlue Airways (JBLU) was valued at 4x its forward EV-to-EBITDA. JetBlue’s valuation is slightly lower than its average of 6x.

The efficiency, or utilization, of an airline’s capacity is measured using the passenger load factor, which is calculated by dividing the traffic numbers by capacity numbers.

In this series, we’ll explore the key highlights of the major US airlines’ 4Q15 earnings. In 4Q15, the stocks of most legacy players outpaced those of regional carriers.

While the Middle East represents the most immediate opportunities, LMT is also working towards more promising opportunities in the Asia-Pacific region.

Wynn Resorts opened its $4.1 billion Wynn Palace on August 22, 2016, and this may have directly contributed to Macao’s casino industry recovery in August.

Delta Air Lines’ (DAL) total traffic fell due to a computer outage. For August 2016, Delta’s traffic fell by 2.8% as compared to the 0.5% capacity growth.

Analyst estimates For 4Q15, analysts are estimating Priceline’s (PCLN) EBITDA (earnings before interest, tax, depreciation, and amortization) to grow by 5% to $749 million with an EBITDA margin of 38%. For fiscal 2015, its EBITDA is expected to grow by 7% to $3,695 million with an EBITDA margin of 40.3%, a decline as compared to 2014. […]

In this part of the series, we’ll look at the outlook for General Dynamics’ individual business segments. General Dynamics has four major business segments.

Stock performance in 2017 Most airline stocks have continued their gaining streak in 2017. As of February 14, 2017, Southwest Airlines (LUV) has seen the highest YTD (year-to-date) gain of 10.9%, followed by Alaska Airlines (ALK) with 8.5%. Allegiant Travels (ALGT) has gained 5.0%, United Continental (UAL) has gained 1.2%, and Delta Air Lines (DAL) […]

Hilton’s consensus 12-month target price is $64.6, which indicates a 12.6% return potential over its April 21 closing price of $58.

As of September 21, 30.8% (four analysts) out of the 13 analysts tracking Spirit Airlines (SAVE) had a “strong buy” recommendation.

Expedia (EXPE) currently trades at a forward PE (price-to-earnings) multiple of 16.79x. This is significantly higher than its average valuation of 12.61x since November 2008.

Growing capacity is necessary for revenue growth. However, capacity expansion that exceeds demand growth can lead to declining utilization.

Hotels with relatively large exposure to Europe will face the brunt of the terror attack in Brussels. European hotel chain Accor Group has 20 hotels in Brussels.

UTC (UTX) stock has generated more than 130% returns over the last decade. This is nearly double the S&P index returns during the same time period.

Due to increasing crude oil prices, Southwest Airlines (LUV) expects fuel costs to rise more in the third quarter.

United Continental (UAL) expects its unit revenue to decline approximately 6%–8% YoY for the upcoming first quarter of 2016. Revenues are expected to remain under pressure in 2016.

Delta Air Lines (DAL) expects to generate more than $7 billion–$8 billion of operating cash flow and ~$4 billion–$5 billion of free cash flow. It plans to reduce its adjusted net debt to $4 billion by 2020.

After initial jitters, the S&P 500 recovered by a wide margin, rising 1.1% at the close of trading on November 9, 2016.

Most emerging economies are grappling with aging fleets and equipment. Modernization will drive growth in the short term as a result.

Boeing has a history of increasing its dividend payout once in every four quarters. The company has already announced a 20% increase in quarterly dividends for 2016.

Out of the 18 analysts tracking Southwest Airlines (LUV), 11 analysts (61.1%) have a “buy” recommendation on the stock versus 71% analysts that had a “buy” recommendation on Southwest in 2Q16.

Adding newer destinations Alaska Air Group (ALK) added a number of new routes in the second quarter of 2015, such as: Boise to Reno Eugene to San Jose, California Los Angeles to Baltimore Los Angeles to Gunnison–Crested Butte Los Angeles to Monterey Los Angeles to San Jose, Costa Rica Portland to Austin Seattle to Charleston […]

Today, one of the biggest challenges for the trucking industry is driver shortage. There aren’t enough experienced drivers. It’s expected to have a negative impact on JBHT.

Alaska Air Group saw the highest surge in traffic demand and was the leader in capacity growth, with a 6.4% YoY increase in its capacity in July 2015.

Forecasts show the civil aerospace market could see a global demand of 27,000 new airliners by 2031. This points to a great market outlook for Embraer.

Out of the 28 analysts surveyed by Bloomberg who track Expedia (EXPE), 19 analysts have a “buy” recommendation on the stock, eight analysts have a “hold” rating, and one analyst has a “sell” rating.

J.B. Hunt’s DCS segment saw a strong 10% year-over-year revenue growth to $363 million for 4Q14, driven by rate increases and more active customer accounts.

ODFL gets a technological edge from its series of wireless automated dock and yard management procedures for its 117 service centers across the US.

Of the 31 analysts rating Priceline’s stock after the company’s 3Q17 earnings report, 19.4% (six analysts) have issued a “strong buy” rating and 58.1% (18 analysts) have issued a “buy” rating.

Airlines’ aggressive capacity growth has had an adverse effect on utilization, which has resulted in declining utilizations for most players.

CTrip’s Accommodation Reservation segment formed in 1999. It very quickly emerged as the company’s leading revenue generator.

2016 has been the worst start for the S&P 500 in the past eight years. US airlines also saw a bad start. The Dow Jones U.S. Airline Index has fallen 4% YTD.

The Otis segment is expected to grow steadily in the next year, driven by growth in key regions such as the US and China.

SPY closed almost flat on March 22. It recovered after an initial sell-off following the terror attack in Brussels. This is common after the uncertainty of an event.

Hilton is poised to grow in its industry and could generate substantial shareholder value for its investors in the long term.

Today, JBHT’s Intermodal segment contributes ~60% of the company’s revenues and 73% of its profits. JBHT is largest intermodal provider.

On a year-to-date basis, Landstar’s revenues stood at $2,321 million, an 18% year-over-year increase from 2013.

Macao has seen extraordinary growth in the past decade and a half. It has also seen a similar fall ever since the Chinese government imposed anti-corruption restrictions in 2014.

UPS’s performance is related to global growth, especially US economic growth. Logistics companies are a direct reflection of the country’s economic health.

In mid-September 2016, the Hawaiian Airlines pilot union opened a strike operations center to operate in the event of a strike.

Boeing is six months ahead of schedule on its 737 MAX production, which means earlier deliveries of the aircraft.

Honeywell has been in business for about three decades. In the past decade, the company has been able to garner more than 150% returns for its investors.

The gaming industry has been heavily dependent on Macao, and the Chinese economy’s troubles don’t seem to be going away soon. Companies are finding new destinations in Japan and Korea to develop the next Macao.

Boeing (BA) recorded $94.6 billion in revenues for 2016—a 2% YoY fall, mainly on the back of lower commercial airplane deliveries in the year.

Alaska Air Group’s (ALK) consensus 12-month target price is $80.55, which indicates a 15.2% return potential on October 10, 2016.

The Sikorsky segment saw a major win from India’s navy, which placed an order for 16 S-70B Seahawk naval helicopters.

Priceline doesn’t offer any cash dividends on its common stock since it prefers to retain future earnings to finance the expansion of its business.

Airlines have been enjoying huge cash surpluses due to cheaper jet fuel, a situation that has persisted since oil prices experienced a massive slide in mid-2014.

For 4Q15, Alaska Air Group’s passenger revenues grew by 4.7% YoY in contrast to the industry’s revenue decline of 1% in 2015. ALK’s total revenue growth stood at 5.5% YoY.

Delta Air Lines (DAL) reported its earnings on October 14, 2015. The earnings call caused greater movement in one of Delta’s key vendors—Boeing (BA).

Qunar (QUNR) has been investing heavily in order to drive business growth. However, this has resulted in operating losses.

Airline capacity utilization is measured using the passenger load factor, which is calculated by dividing traffic numbers by capacity numbers.

The total debt on TripAdvisor’s (TRIP) balance sheet has decreased from $288 million at the end of 2Q15 to $92 million at the end of 2Q16.

United Parcel Service (UPS) continued to perform as expected and recorded its third consecutive quarter of improved earnings per share growth.

Swift Transportation generated stock returns of 28% for 2014—comfortably beating the index returns of ~12%.

Boeing’s operating cash flow for the year was about $9 billion. The operating cash flow was $5 billion for the fourth quarter—up from $1.4 billion in 4Q13.

Since airlines across the industry have been forecast to beat record profits achieved in 2015, consumers have expected a further fall in airfares.

Since JetBlue Airways’ (JBLU) traffic growth was higher than its capacity growth, its utilizations improved in August 2016.

Of the 29 analysts tracking Marriott International (MAR), 17.0% (five analysts) have a “strong buy” recommendation for the stock.

Among its legacy carrier peer group, Alaska Air Group witnessed the most aggressive growth in terms of both traffic and capacity. Airline traffic, as measured by revenue passenger mile, grew by 11.6% YoY in 4Q15.

In the second quarter of 2015, Marriott International’s net income grew by a strong 25% YoY to $240 million. Demand increased in both the US and Europe.

Unlike other online travel industry majors like Priceline (PCLN), Expedia (EXPE), and Ctrip (CTRP), Qunar Cayman Islands (QUNR) earns the highest revenue from flight reservations.

After declining slightly and appearing mostly flat for the past three months, American Airlines’ (AAL) capacity grew by 8% year-over-year in February 2016.

Crude oil prices have been rising throughout 2018 due to supply concerns.

According to a study by Expedia, airfares fell by about 5% in 2015. Despite this decline, passenger complaints are on the rise. Many consumer leaders also lobbied for airfare reductions.

In November 2016, United Continental Holdings’ (UAL) capacity grew by 1.6% YoY (year-over-year). YTD as of November, capacity grew 1.3%.

JetBlue Airways (JBLU) was the only airline stock to have gained more than 50% during 2015, when the stock soared as high as ~65%.

Unemployment rate The unemployment rate indicates the percentage of the labor force that is currently unemployed but actively seeking employment. In 2000, the unemployment rate in Macao peaked at 7%. Since then, tremendous growth in the gaming industry has helped reduce employment in Macao. Unemployment averaged 3.8% between 1996 and May 2017. Between January and […]

For November 2016, visitor arrivals remained unchanged as compared to November 2015 and fell 3.4% month-over-month to 2.6 million visitors.

For 3Q16, analysts are estimating Priceline’s revenues to grow by 16.6%, which would be higher than the 12% growth the company saw in the second quarter.

FedEx continues to see growth in the global economy. It expects the US GDP to grow by 2.4% in 2015 and by 2.6% in 2016, driven by increased consumer spending.

According to a Bloomberg consensus, JetBlue Airways is expected to see earnings per share (or EPS) of $0.6 in the quarter, compared to EPS of $0.58 in 3Q15.

According to Bloomberg’s consensus, out of the 14 analysts tracking American Airlines (AAL), 71.4% have “buy” recommendations.

According to Bloomberg, 12 out of 16 analysts tracking UAL have issued “buy” recommendations. Four analysts have issued “holds.” None has issued a “sell.”

As of January 3, 2016, the Macao casino industry valuation stands at 12.6x. This valuation is lower than the industry average valuation of 12.05x since February 2008.

With total sales of $45,358 million in 2013, Lockheed Martin is the largest defense contractor in the world. The other major defense contractors in the world include The Boeing Company and Raytheon Company.

In the last week of June 2017, Qatar Airways’ CEO, Akbar Al Baker, disclosed the carrier’s interest in buying a 10% stake worth $808 million in American Airlines through the open market.

Qunar Cayman Islands (QUNR) is expected to report its fiscal 4Q15 earnings on March 21, 2016. Of the 12 analysts tracking Qunar, six analysts have a “buy” recommendation on the stock.

For 2016, analysts are estimating United Continental’s (UAL) revenue to decline by 4% to $36.0 billion. The decline is higher than the earlier estimate of 2%.

In 2015, most airline stocks have fallen, and the NYSE ARCA Airline Index (XAL), which is composed of the major US airline stocks, has also tumbled as much as 13.5% year-to-date.

In the past, FedEx has rewarded its investors with returns that were better than the market. Its stock has beaten market returns substantially in the last ten years.

In 2013, Lockheed Martin clocked revenues of $45.4 billion. Of its revenues, 82% come from the U.S. government, around 17% from international customers, and 1% from other U.S. commercial customers.

As of December 10, 2015, the Macao casino industry’s valuation stands at 11.10x.

For 2Q16, analysts are estimating 4.2% revenue growth for Alaska Air Group (ALK), which is slower than the 6.2% growth in 1Q16.

US airline stocks tumbled on Tuesday, August 3, following Delta Air Lines’s (DAL) weak operational metrics for July 2016. DAL reported a 7% year-over-year decline in its passenger revenue per available seat mile numbers for July 2016.

The Trans-Pacific Partnership is expected open cross-border trade between member nations by increasing imports and exports and cutting taxes and tariffs.

May revenue marks a high point According to the Gaming Inspection and Coordination Bureau, Macao’s gross gaming revenue has risen 23.7% YoY (year-over-year) to 22.7 billion Macao patacas, or $2.8 billion. The revenue growth beat analysts’ estimate by a wide margin. Analysts had forecast Macao’s May revenue to grow 16.5% YoY. May marks the tenth consecutive […]

Priceline’s consensus 12-month target price is $1,479.55, which indicates an 11.5% return potential.

Analyst recommendations Among the seven major carriers, most analysts seem to favor Delta Air Lines (DAL). Delta Air Lines has a “buy” rating from 87.5% of analysts covering it. Next is Southwest Airlines (LUV), which has 70.6% of analysts recommending “buy” and 29.4% recommending “hold.” Alaska Airlines (ALK) has 69.2% of analysts recommending “buy” and […]

Analysts are estimating 2Q16 revenue of ~$1.7 billion for JetBlue Airways (JBLU), which is a year-over-year increase of 2.2%.

This introduction to Boeing (BA) provides basic information about the aerospace manufacturing leader’s products, services, and third-quarter performance.

Year-to-date through February 23, 2017, Priceline (PCLN) stock has risen 11.7%, outperforming rivals Expedia and TripAdvisor (TRIP).

FedEx (FDX) offered to purchase TNT Express for an all-cash deal of $4.8 billion. The deal aims to provide FedEx with a strong hold in the European market.

American Airlines (AAL) stock rose almost 0.94% on September 12, the day of its traffic release.

Analyst upgrades Delta Air Lines (DAL) has already received four downgrades since its traffic release yesterday. Imperial Capital reduced its target price from $54 to $50, Deutsche Bank has reduced its target price from $62 to $59, Cowen & Co. has reduced its target price from $66 to $60, and UBS has reduced its target […]

Online travel industry leaders like Priceline (PCLN) and Expedia (EXPE) have a mixed relationship. They’re partners as well as competitors.

Raytheon’s Integrated Defense Systems segment saw marginally lower sales during the year due to lower sales across most of its major programs such as the Patriot program.

For July 2016, JetBlue Airways’ (JBLU) traffic grew by 6.6% YoY (year-over-year), higher than its July 2016 capacity growth of 5.5% YoY.

The airline industry’s fundamentals have improved tremendously in the past two years. This was driven by several factors that include low oil prices, strong passenger travel demand, and strong economic growth.