Southwest Airlines Company (NYSE: LUV) and JetBlue Airways Corporation (NASDAQ:JBLU) are both mid-cap transportation companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitabiliy, risk and analyst recommendations.
Risk & Volatility
Southwest Airlines Company has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500. Comparatively, JetBlue Airways Corporation has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500.
This table compares Southwest Airlines Company and JetBlue Airways Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Southwest Airlines Company||10.16%||26.75%||9.40%|
|JetBlue Airways Corporation||9.61%||16.42%||6.70%|
Southwest Airlines Company pays an annual dividend of $0.50 per share and has a dividend yield of 0.8%. JetBlue Airways Corporation does not pay a dividend. Southwest Airlines Company pays out 15.1% of its earnings in the form of a dividend. JetBlue Airways Corporation has increased its dividend for 5 consecutive years.
Insider & Institutional Ownership
80.6% of Southwest Airlines Company shares are held by institutional investors. Comparatively, 84.2% of JetBlue Airways Corporation shares are held by institutional investors. 0.2% of Southwest Airlines Company shares are held by insiders. Comparatively, 0.6% of JetBlue Airways Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Southwest Airlines Company and JetBlue Airways Corporation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Southwest Airlines Company||$20.48 billion||1.83||$5.01 billion||$3.31||18.71|
|JetBlue Airways Corporation||$6.62 billion||1.13||$1.48 billion||$1.86||12.04|
Southwest Airlines Company has higher revenue and earnings than JetBlue Airways Corporation. JetBlue Airways Corporation is trading at a lower price-to-earnings ratio than Southwest Airlines Company, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings for Southwest Airlines Company and JetBlue Airways Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Southwest Airlines Company||0||5||11||0||2.69|
|JetBlue Airways Corporation||1||7||3||0||2.18|
Southwest Airlines Company presently has a consensus price target of $61.24, suggesting a potential downside of 1.10%. JetBlue Airways Corporation has a consensus price target of $25.38, suggesting a potential upside of 13.28%. Given JetBlue Airways Corporation’s higher possible upside, analysts clearly believe JetBlue Airways Corporation is more favorable than Southwest Airlines Company.
Southwest Airlines Company beats JetBlue Airways Corporation on 12 of the 17 factors compared between the two stocks.
About Southwest Airlines Company
Southwest Airlines Co. (Southwest) operates Southwest Airlines, a passenger airline that provides scheduled air transportation in the United States and near-international markets. The Company provides point-to-point service. The Company offers ancillary service offerings, such as Southwest’s EarlyBird Check-In and transportation of pets and unaccompanied minors, in accordance with Southwest’s respective policies. Southwest’s Rapid Rewards frequent flyer program enables program members (Members) to earn points for every dollar spent on Southwest fares. Its Internet Website, Southwest.com, is an avenue for Southwest customers to purchase and manage travel online. As of December 31, 2016, Southwest operated a total of 723 Boeing 737 aircraft and served 101 destinations in 40 states, the District of Columbia, the Commonwealth of Puerto Rico, and eight near-international countries: Mexico, Jamaica, The Bahamas, Aruba, Dominican Republic, Costa Rica, Belize, and Cuba.
About JetBlue Airways Corporation
JetBlue Airways Corporation is a passenger carrier company. The Company provides air transportation services across the United States, the Caribbean and Latin America. Its segments include Domestic, and Caribbean & Latin America. It operates various kinds of aircrafts, including Airbus A321, Airbus A320 and Embraer E190. It also provides premium transcontinental product called Mint. As of December 31, 2016, Mint included 16 fully lie-flat seats, four of which were in suites with a privacy door. The Company also provides Fly-Fi in-flight Internet service across its Airbus fleet. It provides its customers a choice to purchase tickets from three branded fares, which include Blue, Blue Plus and Blue Flex. Each of these fare include different offerings, such as free checked bags, reduced change fees and additional TrueBlue points. As of December 31, 2016, its Airbus A321 aircraft in a single cabin layout had 200 seats and those with Mint premium service had a seating capacity of 159 seats.
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