SkyWest, Inc. (NASDAQ:SKYW)

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Selling well below book while its prospects are looking up. I bought this at $9.25 but once again forgot to update CAPS in a timely manner. This one should have room to run but I am a little worried about a fall pull-back in the market. Still when a stock is cheap and earning are starting to grow the stock price has a tendency to improve.

I understand this company is an airline.

Well, I work for this outfit and they always seem to find a way to make money. I think its cheap right now, but unfortunately, I think it will go to near $5 for a bottom before it finally turns around. I was granted stock and I have kept it for the long haul.

This is a solid company with a very good track record. It has non-union pilots which is a plus to me.

As of end of FYE 09, this company had 721 million in cash and short term investments. Currently, on Memorial Day 2010, it trades at just an 820mm market cap. So for $100m more you get the whole entire airline! This is a margin of safety pick... At some point, economic trends will work in this company's favor and the stock price will reflect at minimum the book value of this company. But we must wait until the winds of change find the underside of SkyWest's wings. But at this price you can afford to wait awhile.

Following Mr. Independent.
Debt to Equity 1.45x
Quick Ratio 2.59x
Current Ratio 2.79x
56.8% Gross Margin higher than 90% of peers
Increased traffic

I am not generally a fan of airlines, but at the right price, I like any company. SkyWest currently qualifies for my "out of favor stocks" screen which looks for low forward p/e ratios, low p/bv ratios, low share prices and recent earnings disappointments. The screen has trounce the S&P 500 over the last decade. But if you are bearish on stocks you may want to pass on this pick because this stock screen tends to thrive in bull markets and performs in line with the market when the market is declining. Skywest is currently available for just 0.59 times book value and 8.4 times 2010 estimated earnings, which are at low ebb. Eventually, the news will turn in this company's favor for awhile and the price will likely soar past book value. This company maintains a gigantic cash stockpile and is currently earning money. Thus, there is no realistic risk of insolvency.

SkyWest is the least leveraged US airline, with "only" $1.85B of debt. They are currently trading at .6x tangible book, 9.3x trailing earnings and 7x forward earnings. I believe their conservative fiscal approach will pay off over the next couple of years - when things get rough, they can grow and increase profitability on their own terms. The other regionals including RJET and PNCL also look like good deals but carry a bit heftier debt.

floridabuilder has always emphasized the importance of drawing distinctions, even in a troubled industry:
"If you are red thumbing NVR because you hate all builders red thumb away. If you are red thumbing NVR because you think the company is in trouble or is not run well.... you are barking up the wrong tree.

NVR is best in class in the industry. Don't bite into the only apple with a worm in it."

In my opinion a lot of people red thumbing regional airlines are making the same mistake.

This met a high level screen to indicate a buy and strong outperform against its peers (other tickers in its industry). My 1st version of this spreadsheet devles deep into the company's balnace sheet and recent income statements, combined with other relevant price data for the company including insider/institutional holdings, short interest, debt levels, etc.
Testing capabilities of this 1st version of my automated, valuation spreadhseet matched with my personal criteria and see how it holds up.

stock screener

They are slated to lose the Midwest Express contract, this hurts the fundamental diversification of this company

I love SkyWest Airlines, and I am sure everyone knows that the Airlines are not the best way to go, however, SkyWest Airlines, being a Commuter and Regional Airline, it will soar more so then the Majors.

SKYW has a solid relationship with it's mainline partners. ASA has recently been awarded 10 900 series CRJ's. They have been proactive in cost reductions and have been profitable in the fourth quarter. Plenty of cash on hand.

Company is cheap on the fundamentals. It trades at a low P/E, is growing revenue, trades below net tangible assets and an enterprise value to revenue below 1.

Largest regional airline in the U.S. and now diversified into foreign markets. The airline passes fuel cost through to its major airlines via "cost plus" contracts but has been priced as an airline with direct fuel costs.

Part of my short airline Chapter 11 basket trade.

The airline industry is in a very unique position. With the price of oil (gas) escalating, people in the US would rather fly than drive on their vacations. The airline may be paying more for oil, but that cost will ultimately be passed along to the passengers.

This industry has been able to evolve with the times, and these times will prove to be no different. If the airlines could survive 911, surely they can survive a rise in oil prices.

Airlines are traditional bad bets and Skywest is the only one I would ever care to own. This is a great regional carrier based out of St. George, Utah. It's affiliation with Delta Airlines, who may merge with Northwest Airlines, makes it the premier regional airline in the Intermountain West. One thing to like about this company is the long-standing, ultra conservative, and squeaky clean management who have yet to make any significant corporate mistakes, even in this very challenging economic climate.