SkyWest Stock Soars 130.4% Year Over Year: Future Prospects

SkyWest (SKYW) has experienced remarkable growth in its stock performance over the past year, with shares soaring 130.4%, significantly surpassing the 44.5% growth of its industry.

Given this impressive gain, it's worth examining the factors contributing to this success for SkyWest, which currently holds a Zacks Rank #1 (Strong Buy). Additionally, we will assess if there is potential for further increases in the stock price.

The surge in demand for air travel has been a crucial driver for SkyWest's revenue growth. Notably, the flying agreement segment has seen particularly strong demand, but other sectors such as leasing and airport services have also shown substantial recovery. The robust air travel demand has translated into an impressive 18.7% year-over-year revenue growth for SkyWest during the first nine months of 2024. This revenue increase is largely attributed to a 19.1% rise in flying agreements, which now represent 96.8% of the company's total revenue.

SkyWest Airlines operates a fleet of approximately 500 aircraft that connect passengers to over 240 destinations across North America. The airline collaborates with major airlines including United Airlines, Delta Air Lines, American Airlines, and Alaska Airlines, carrying over 38 million passengers in 2023.

Additionally, SkyWest's fleet modernization initiatives are noteworthy. The company has established fleet-related agreements with significant airlines like United Airlines and Alaska Airlines, the latter being a subsidiary of Alaska Air Group. By the end of 2026, SkyWest plans to operate 278 E175 aircraft. In February 2024, SkyWest revealed the acquisition of a 25% ownership stake in Contour Airlines, enhancing its regional service capabilities.

During the announcement of its third-quarter 2024 results, SkyWest disclosed a new deal with United Airlines to introduce 40 CRJ550 aircraft under a multi-year contract. Within this arrangement, SkyWest plans to purchase 11 used CRJ550s while converting 29 of its CRJ700s to CRJ550s.

With the expectation of sustained demand for air travel, SkyWest's stock is likely to continue its strong performance moving forward.

Positive Estimate Revisions Ahead

Encouraged by the favorable air travel demand, the earnings per share estimates for SkyWest are projected to rise by 4.07%, 4.07%, and 7.05% for the fourth quarter of 2024, the full year of 2024, and the full year of 2025, respectively.

Alternative Stock to Explore

In addition to SkyWest, investors might consider another top-ranked stock from the transportation sector, ZIM Integrated Shipping Services. ZIM also holds a Zacks Rank #1 (Strong Buy) and has a strong earnings surprise history. The company's earnings have exceeded the Zacks Consensus Estimate in three of the last four quarters, providing an average surprise of 12.62%.

ZIM shares have surged 168.2% this year, benefiting from high freight rates induced by the Red Sea crisis, focusing on niche markets, and a shareholder-friendly business approach.

SkyWest, Growth, Aviation