Long-established in the Transportation industry, JetBlue Airways Corp (JBLU, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 5.03%, juxtaposed with a three-month change of -41.63%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of JetBlue Airways Corp.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 6/10
- Growth rank: 3/10
- GF Value rank: 2/10
- Momentum rank: 5/10
Based on the above method, GuruFocus assigned JetBlue Airways Corp the GF Score of 64 out of 100, which signals poor future outperformance potential.
JetBlue Airways Corp: A Snapshot
JetBlue Airways Corp is a low-cost airline that offers high-quality service, including assigned seating and in-flight entertainment. It serves approximately 100 destinations in the United States, the Caribbean and Latin America, Canada, and England. The company currently operates Airbus A321, Airbus A320, Airbus A321neo, and Embraer E190 aircraft types. The operating segments of the company are Domestic & Canada, Caribbean & Latin America, and Atlantic. Majority of revenue is generated from the Domestic & Canada segment. With a market cap of $1.57 billion and sales of $9.92 billion, the company has an operating margin of 3.83%.
Financial Strength Analysis
JetBlue Airways Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 2.09 positions it worse than 80.3% of 792 companies in the Transportation industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
The company's Altman Z-Score is just 1, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.38 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 5.26, which is above Joel Tillinghast's warning level of 4 and is worse than 73.97% of 799 companies in the Transportation industry. Tillinghast said in his book “Big Money Think's Small: Biases, Blind Spots, and Smarter Investing” that a high debt-to-Ebitda ratio can be a red flag unless tangible assets cover the debt.
Growth Prospects
A lack of significant growth is another area where JetBlue Airways Corp seems to falter, as evidenced by the company's low Growth rank. Lastly, JetBlue Airways Corp predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While JetBlue Airways Corp has a rich history in the transportation industry, its current financial indicators and growth prospects suggest that it may struggle to maintain its past performance. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
