Republic Airways Holdings Inc. - Value

Really? An airline stock? Republic Airways Holdings Inc. (RJET) is cheap, with a forward P/E of just 8.1.

A lot of changes have occurred with Republic Airways since I last reviewed it in Dec 2008. Since then, the company has grown its branded business by acquiring Frontier and Midwest Airlines in 2009.

It now operates, in addition to those two, Chautauqua Airlines, Lynx Aviation, Republic Airlines and Shuttle America.

It offers 1600 flights on 282 planes to 126 cities in 47 states, Canada, Costa Rica and Mexico. In addition to its own brands, the company operates fixed-fee flights through airline partnerships such as Continental Express, United Express, Delta Connection, AmericanConnection and US Airways Express.

Frontier Had Record Load in August

On Sep 3, Republic Airways reported its August preliminary passenger traffic results and saw a 120% increase in revenue passenger miles (RPMs) over August of 2009. Much of the increase, however, was due to the acquisition of Frontier.

But Frontier, which includes its branded segments of Frontier Airlines, Lynx and Midwest, saw its RPMs rise 10% over August 2009. It also reported a record load factor for the 6th consecutive month which was 88% compared to 87% in August 2009.

Frontier serviced 5% more passengers in August compared to last year.

Republic Airways Beat By 253% in the Second Quarter

On Aug 3, Republic Airways reported its second quarter results which surprised on the Zacks Consensus by 33 cents. Earnings per share were 46 cents compared to the consensus of just 13 cents.

Fixed-fee service revenue declined $50.1 million to $260.2 million in the second quarter. It had removed 33 aircraft from the fixed-fee service since June 2009.

The Frontier branded segment saw a load factor of 85.9% for the quarter.

2010 Zacks Consensus Estimate Soared

Within the last 30 days, the 2010 Zacks Consensus Estimate has jumped 84 cents to 90 cents per share. There is, however, only one estimate for the full year.

This is earnings growth of 52.5%.

You can see the uncertainty with 2011, though. The 2011 Zacks Consensus is also at 90 cents which means analysts are projecting no growth.

Value Fundamentals

In addition to its low P/E, Republic also has a low price-to-book ratio of 0.5, which is under the industry average of 1.5.

Republic Airways is a Zacks #1 Rank (strong buy).

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

 
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