The stock has gained 34.1% since February, with the company reporting its best-ever month for passengers in July, despite a slowdown in Western Canada.
WESTJET AIRLINES (Toronto symbol WJA; www.westjet.com) flies to 100 destinations in North America, Central America, the Caribbean and Europe. Its 108 modern Boeing 737s are 30% more fuel efficient than older jets.
In the three months ended June 30, 2016, WestJet’s revenue rose slightly, to $949.3 million from $942.0 million a year earlier. Revenue increased despite continued weakness in the Alberta market. That largely offset a 25% drop in fuel prices. Fuel usually accounts for a third of the airline’s operating expenses.
WestJet earned $36.7 million, or $0.30 a share, in the quarter. That’s a 40.5% drop from the $61.6 million, or $0.49 a share, a year earlier. Mechanical problems with its Boeing 767 aircraft (purchased from Qantas Airways for WestJet’s new London routes) led to higher one-time costs.
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Growth Stocks: Load factor rises to 85.2%
Since the end of the quarter, the company’s load factor has improved: it rose to 85.2% in July from 82.8% a year earlier. (Load factor is the percentage of seats occupied by paying passengers.) WestJet had fuller flights despite increasing its capacity 10.7% to meet higher demand. It flew 2.0 million passengers in July, its best-ever month.
The stock is up 34.1% from the $18.52 it was in February when we made it a top pick for the year. WestJet is forecast to earn $2.75 a share for 2016, and the stock trades at a low 9.0 times that estimate.
Recommendation in Stock Pickers Digest: BUY
For our recent report on a well-known growth stock that can adapt to changing conditions, read Premium products pump up Goodyear’s earnings.
For our view on one popular category of growth stocks, read Investing in the best tech stocks for your portfolio.
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