Why JetBlue Airways (JBLU) Is Up Today

NEW YORK (TheStreet) -- JetBlue Airways  (JBLU) rose 1.71% to $8.90 at 11:52 a.m. on Thursday after the company announced it would sell its in-flight entertainment service, LiveTV, to French defense company Thales Group for $400 million as it tries to cut costs.

High maintenance and repair costs have weighed down JetBlue, which has 80% of its business in the U.S. Northeast, in the past few quarters. The airline also announced earlier this week that it canceled nearly 4,000 flights because of winter storms.

JetBlue also said it would enter into an agreement with LiveTV to continue providing the service after the sale, which should be completed by the mid-2014.

"We believe JetBlue will benefit from reduced operating costs and capital expenditures related to running LiveTV as a subsidiary," JetBlue CFO Mark Powers said in a statement. 

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TheStreet Ratings team rates JETBLUE AIRWAYS CORP as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate JETBLUE AIRWAYS CORP (JBLU) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, solid stock price performance, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • JETBLUE AIRWAYS CORP has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, JETBLUE AIRWAYS CORP increased its bottom line by earning $0.51 versus $0.39 in the prior year. This year, the market expects an improvement in earnings ($0.72 versus $0.51).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Airlines industry. The net income increased by 4600.0% when compared to the same quarter one year prior, rising from $1.00 million to $47.00 million.
  • JBLU's revenue growth trails the industry average of 26.9%. Since the same quarter one year prior, revenues rose by 14.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • This stock has managed to rise its share value by 41.06% over the past twelve months. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Net operating cash flow has increased to $193.00 million or 22.92% when compared to the same quarter last year. Despite an increase in cash flow, JETBLUE AIRWAYS CORP's cash flow growth rate is still lower than the industry average growth rate of 34.08%.
  • You can view the full analysis from the report here: JBLU Ratings Report

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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.

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