What: Shares of niche airline Hawaiian Holdings (NASDAQ:HA) took off last month, rallying 41%, according to S&P Capital IQ data. This propelled the stock well above the previous all-time high set back in January.

HA Chart

Hawaiian Holdings YTD Stock Performance, data by YCharts

The momentum continued past the end of the month, as Hawaiian Holdings stock rose 10% in the first week of November, surpassing $38. The stock has risen more than sevenfold since April, 2013.

So what: Hawaiian's stellar October stock performance was catalyzed primarily by a favorable investor update issued early in the month, followed by a strong earnings report and solid Q4 guidance released on October 19. Revenue trends for Hawaiian Airlines' interisland routes are starting to improve, while slower growth in West Coast-Hawaii airline capacity is expected to drive better unit revenue trends there as well.

As a result of these improving conditions, analysts have increased their 2015 and 2016 earnings per share expectations by 13% and 14%, respectively, in the past 90 days.

Of course, this alone can't explain the stock's more than 50% rise since early October. Hawaiian Holdings' forward earnings multiple has also increased significantly, as shown in the chart below.

HA PE Ratio (Forward 1y) Chart

Hawaiian Holdings P/E Ratio (Forward 1y), data by YCharts

Hawaiian Holdings' single-digit earnings multiple throughout the bulk of 2015 indicated that investors were quite skeptical about its ability to maintain -- let alone grow -- its earnings in the future. The company's strong Q3 results and guidance have quieted most of the doubters.

Now what: Even after its massive run, Hawaiian Holdings looks fairly cheap compared to the broader market. However, there are still numerous airline stocks trading for less than 10 times earnings, so on a relative basis it looks like less of a bargain now.

Hawaiian does have a unique earnings catalyst coming in the next few years as it introduces a new aircraft type (the A321neo) to its fleet. This justifies a premium valuation for the stock.

Nevertheless, the company also faces some unique risks, including geographical concentration -- all of its flights begin or end in Hawaii -- and high exposure to international markets, where the strong dollar and falling fuel surcharges are pressuring unit revenue. That could make it a good time for Hawaiian Holdings shareholders to take some money off the table.

Adam Levine-Weinberg owns shares of Hawaiian Holdings, and is short April 2016 $38 calls on Hawaiian Holdings, The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.