Republic Airways Holdings ($RJET) – Stock pick for 2-27-14

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Republic Airways Holdings Inc., through its subsidiaries, provides scheduled passenger services. It offers scheduled passenger service on approximately 1,300 flights daily to approximately 110 cities in the U.S., Canada, and the Bahamas through fixed-fee flights operated under airline partner brands, including American Eagle, Delta Connection, United Express, and US Airways Express.

Today they reported fourth quarter 2013 income from continuing operations of $16.5 million, or $0.30 per diluted share, compared to $8.8 million, or $0.17 per diluted share from continuing operations in the prior year. Net income increased 23.8% to $15.6 million for the fourth quarter of 2013, compared to $12.6 million in the same period in the prior year. Operating revenues for the quarter increased 5.8% to $346.5, million compared to $327.4 million for the fourth quarter of 2012.

Full year income from continuing operations increased 54.3% to $48.3 million, or $0.92 per diluted share, compared to $31.3 million, or $0.63 per diluted share for the full year 2012.

They did report, due to weather issues across the country in January and February, they had a dip in revenue for the current quarter. However, that should be just a temporary dip as they have been growing quite well, as the numbers above show.

According to analysts following the stock, they expect the stock to rise to anywhere from $12.50 – $15. Options activity show calls being bought at a 4 to 1 clip over puts which is a bullish sign. Their price to book ratio sits below 1 at .81 which means they are undervalued in share price. Institutional investors also bought up 1.8 million shares in the previous quarter.

Checking with my Prophet tool from TD Ameritrade, a bullish chart pattern is showing and it expects a future price range from $12.65-$14.14 in the near future as seen below.

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If the price does meet the targets predicted by the tool, that would be an expected gain of 32% to 47% in that range at a current price of $9.58. Per the analysts range, you would look at a 30% – 57% gain at the same current price.

As long as Republic Airways can continue to build on the business and continue to do a great job like they did last quarter, they should have no problem in growing share price. With that sort of upside, I see them as an excellent pick.

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