Why Republic Airways (RJET) Stock Is Up Today

NEW YORK (TheStreet) -- Republic Airways (RJET) was gaining 10.1% to $11.31 Wednesday after reaching a new agreement with United Airlines (UAL) and ordering 50 new jets from Embraer (ERJ) .

The regional airline placed an order for 50 of Embraer's next-generation E-175 aircraft that will be operated for United under the United Express brand. The order for the new aircraft is valued at $2.1 billion.

The 50 new aircraft are part of Republic's expanded Shuttle America E-Jet capacity purchase agreement with United. The duration of each of the new aircrafts under the agreement will be 12 years.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings team rates REPUBLIC AIRWAYS HLDGS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate REPUBLIC AIRWAYS HLDGS INC (RJET) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk and generally disappointing historical performance in the stock itself."

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

  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Airlines industry average. The net income has decreased by 18.3% when compared to the same quarter one year ago, dropping from $24.60 million to $20.10 million.
  • The debt-to-equity ratio is very high at 3.87 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, RJET has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • RJET has underperformed the S&P 500 Index, declining 14.69% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Airlines industry and the overall market, REPUBLIC AIRWAYS HLDGS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has increased to $84.80 million or 14.90% when compared to the same quarter last year. Despite an increase in cash flow of 14.90%, REPUBLIC AIRWAYS HLDGS INC is still growing at a significantly lower rate than the industry average of 73.63%.
  • You can view the full analysis from the report here: RJET Ratings Report

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.

If you liked this article you might like

Republic Airways Holdings (RJET) Is Weak On High Volume Today

Republic Airways Holdings (RJET) Is Weak On High Volume Today

Analysts' Actions -- DSW, H&R Block, Papa John's, Qualcomm and More

Analysts' Actions -- DSW, H&R Block, Papa John's, Qualcomm and More

5 Stocks Under $10 Set to Soar

5 Stocks Under $10 Set to Soar

ALPA: Don't Blame Pilot Shortage for Republic Plight

ALPA: Don't Blame Pilot Shortage for Republic Plight

Strong On High Volume: Republic Airways Holdings (RJET)

Strong On High Volume: Republic Airways Holdings (RJET)