Shares of JetBlue (JBLU 0.39%) were soaring Tuesday, up by 17% as of 1 p.m. ET after the discount airline landed a surprise profit in the middle of Wall Street before the opening bell.
Heading into the quarterly report, the consensus view among analysts was that the airline would lose $0.11 per share on $2.4 billion in revenue in Q2. They were right about the revenues -- but instead of losing money, JetBlue delivered an $0.08 per share profit.
NASDAQ: JBLU
Key Data Points
JetBlue Q2 earnings
Granted, that $0.08 profit was an adjusted number -- but so was Wall Street's estimate. However, the company's generally accepted accounting principles (GAAP) profit didn't land too far off that mark at $0.07 per share. That's still a heck of a lot better than a loss of any size.
CEO Joanna Geraghty pointed out that the profit surprised even JetBlue itself, being well ahead of the company's prior guidance. But she promised to double down on the progress already made, announcing a "JetForward" strategy under which the carrier will exit from unprofitable markets and refocus on its core markets in New York, New England, Florida, and Puerto Rico, all with the aim of adding as much as $800 million to $900 million in extra annual operating profits by 2027.
Is JetBlue stock a buy?
Granted, not all of this will happen at once. Granted, too, JetBlue is still not profitable on a trailing-12-month basis -- yet. In fact, despite Q2's surprise profit, the company still sports a one-year loss of nearly $950 million. Still, the idea that management's plan could add more than $800 million in annual operating profits to those losses suggests that within just a few years, JetBlue could be a profitable operation once again.
In the nearer term, investors should brace for some turbulence. Management's latest forecast for 2024 is for revenues to shrink by about 5%. While management didn't give an earnings forecast, a declining top line probably doesn't bode too well for profits.
Investors can always hope that the airline surprises us (and itself?) again. But for the time being, JetBlue stock still looks like a risky bet to me.
