This report analyzes JetBlue Airways and recommends buying its stock. Key points include: - JetBlue has grown to the 5th largest US carrier with 800 daily flights and a differentiated customer experience. - The stock is undervalued based on ratio analysis and trades below industry averages. - JetBlue will benefit from strong revenue growth, expected EPS growth, and a busy summer travel season with record numbers of passengers. - With a stable economy and low fuel prices, the analyst recommends taking advantage of a recent dip to establish a long position in JetBlue.

1. JetBlue Airways Corporation
(JBLU: Nasdaq GS)
Analyst Report by Luke Robinson

2.  Launched in 2000 and has grown to the U.S’s 5th largest passenger
carrier.
 Average of 800 daily flights to 82 cities in the U.S, Caribbean, and
Latin America
 Differentiated Product & culture
 Most leg room in coach, TV, snacks, Fly-fi, exceptional customer service
 Leader in in-flight entertainment
 Competitive Costs
 Cost structure lower than competitors, able to hedge against oil prices
 High Value Geography
 Operates from 6 focus cities in the largest travel markets in the world
 According to a recent airline satisfaction survey from McGraw Hill
Financial Inc.’s J.D. Power, JBLU was rated top among low cost
carriers
Business Summary

3.  Price = 18.81 (-1.05%) as of 06/09/2015
 Market Cap = $6 Billion
 52 week range = 9.38 – 22.40
 50 DMA = 20.23, 100 DMA = 18.73
 Beta = 0.73
 Indicates lower volatility and less risk for the
stock as it does not always move directly with
the market
Stock Info

4.  P/E = 12.40 Industry P/E = 21.00, S&P P/E = 20.41
 Stock is cheap and undervalued for its earnings, compared to industry
and S&P 500
 P/B = 2.18, Industry P/B = 5.1, S&P P/B = 2.84
 Stock is overlooked in the market for what it is valued on the
company’s books
 Price/FCF = 22.53, Industry Price/FCF = 62.00
 JBLU is cheap for the amount of cash it holds
 Take advantage of 7% move to the downside on 06/08/2015
Stock is undervalued, take advantage

5.  ROE = 22.04% up from 17.20% in 2014, Industry = 11.70%
 Company maximizes its equity for a return to its shareholders
 Debt/Equity = 80.55, Industry Debt/Equity = 78.16, Sector
Debt/Equity = 114.14
 Company is slightly more leveraged to allow for greater growth than the
industry
 Profit Margin = 8.99%, Industry = 4.60%, Sector 4.96%
 Net Income increased from $4 million to $137 million when
comparing this past quarter to last year’s. From the trailing 12
months Net Income is up to $534 million from $401 million in
2014
 Free Cash Flow for trailing twelve months is $283 million, up
from just $55 million in 2014
 Gives JBLU ample cash for company to return to shareholders/pursue
opportunities
Ratio Analysis & Key Statistics

6.  Current quarter growth = 142.10%, industry = 46.50%
 Next quarter expected growth = 120.80%, industry = 58.50%
 This year’s growth tracking to 152.90%, industry = 45.10%
 Total growth for next 5 years expected to be 46.90%, industry =
11.67%
 Revenue growth is up 12.9% from the same quarter last year
 EPS in 2013 = 0.52, EPS in 2014 = 1.19, EPS estimate in 2015 = 1.78
 EPS this quarter tracking to 0.46 (0.19 last year), next quarter
EPS growth expected to be 0.53
 From a growth perspective the stock seems poised to rally
Growth

7.  Considering a 2 month time horizon during prime summer months, very
bullish on JBLU for short term gain
 Based on a stronger U.S economy, improving labor market/consumer
sentiment, wage growth, and sustained low oil costs, consumers have
more disposable income to utilize
 According to Airlines for America, the largest U.S airline travel trade
association, 222 million passengers will travel on U.S airlines from June-
August, an all-time record
 Airlines for America expects 2.4 million passengers daily and JBLU plans
to increase capacity between 5-7% this quarter
 Summer has 13 of the 15 busiest travel days
 JBLU just introduced new international routes to Cuba, Caribbean, and
Mexico City
Airlines Expect a Busy Summer

8.  Bullish on the stock as oil remains low, around
$60/barrel, OPEC leaving production targets
unchanged (fuel is largest operating expense)
 U.S economy strengthening, May non-farm payrolls
beat expectations at 280,000, airlines usually first to
see economic upticks
 Expect appreciation in the US$ from Fed tightening
looming and other Central Bank easing depreciating
foreign currencies, when US$ appreciates
commodities like oil tend to move inversely in price,
when oil moves lower airlines benefit
 US$ will not hurt JBLU profits as the airline sells vast
majority of its tickets to U.S travelers, most
exposure is to the domestic market
 US airlines are oversold from speculative moves in
oil/news, take advantage of recent downswing for a
lower entry point
Tailwinds

9.  OPEC news/meetings, and oil movements
 Jobs data, GDP, Fed meetings, and other
economic indicators
 Geopolitical conflicts, ISIS in Middle East
 JBLU earnings report on 07/24/2015
 Watch airline news like Monday’s comments
from AAL CEO that drove down airline stocks on
06/08/2015
What to Watch while holding

10.  Strong revenue growth, strong past/expected EPS growth, and
expected EPS growth for next quarter
 Solid profit margins, ROE, FCF, and growth in net income
 Stock ratio/fundamental analysis shows clear undervaluation
from its fair value
 Will benefit from strong U.S economy, labor market, wage
growth, low fuel costs stabilizing, and positive past stock price
performance
 Bullish from increased airline passenger traffic projection
BUY Rating