Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Skywest Incorporated (Nasdaq: SKYW) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.
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- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 46.46% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SKYW should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- SKYWEST INC has improved earnings per share by 18.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, SKYWEST INC turned its bottom line around by earning $0.99 versus -$0.53 in the prior year. This year, the market expects an improvement in earnings ($1.24 versus $0.99).
- Net operating cash flow has increased to $143.11 million or 28.62% when compared to the same quarter last year. Despite an increase in cash flow, SKYWEST INC's cash flow growth rate is still lower than the industry average growth rate of 44.72%.
- SKYW, with its decline in revenue, underperformed when compared the industry average of 2.1%. Since the same quarter one year prior, revenues fell by 10.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.