Is SkyWest's Cheap Valuation Reason Enough to Buy the Stock?

SkyWest, Inc. (SKYW) looks cheap from a valuation standpoint. Considering the trailing 12-month price-to-book (P/B)ratio, SkyWest is trading at a discount compared to the industry.

The stock has a trailing 12-month P/B-TTM of 1.50X compared with 3.16X for the industry over the past five years. These factors indicate that the stock’s valuation is attractive. SKYW has a Value Score of A.

SKYW P/B Ratio (Trailing 12 months) Vs. Industry

Now, the question is whether it is worth buying, holding, or selling the SkyWest stock at current prices. Let us delve deeper to find out.

Tailwinds Working in Favor of SKYW Stock

SkyWest's top line benefits from flying contract rate increases. As of Sept. 30, 2025, SkyWest had cumulative deferred revenues of $269.40 million under its flying contracts. Revenues from flying agreements (contributing 96.1% to the top line) grew 16.5% year over year during the first nine months of 2025. The airline carried 12.3% more passengers during the first nine months of 2025 on a year-over-year basis. Departures increased 16.2% on a year-over-year basis.

SkyWest's fleet-modernization efforts to cater to the improvement in travel demand are commendable. In a bid to modernize its fleet, SKYW has fleet-related agreements with airline heavyweights like United Airlines UAL, Delta Air Lines DAL and Alaska Airlines ALK. SKYW had no E175 aircraft deliveries during the third quarter of 2025, consistent with prior expectations.

Concurrent with its third-quarter 2025 results, SkyWest also announced that it has inked a multi-year contract extension with United Airlines for up to 40 CRJ200 aircraft. Further, UAL is scheduled to deliver three E175 planes in the fourth quarter of 2025 and 10 in 2026. Alaska Airlines is expected to deliver one E175 in 2026. DAL is likely to deliver 10 E175 planes in 2027 and six in 2028.  Apart from deals with UAL, DAL and ALK, SkyWest is scheduled to purchase 16 E175s from Embraer, with delivery dates in 2027 and 2028. By 2028-end, SkyWest is expected to have nearly 300 E175 aircraft.

SkyWest’s solid balance sheet increases financial flexibility. The company ended third-quarter 2025 with cash and marketable securities of $753.35 million, higher than the current debt level of $519.51 million. This implies that the company has sufficient cash to meet its current debt obligations. Meanwhile, long-term debt level has decreased to $1.86 billion (which translates into a debt-to-capitalization of 49%) at the end of third-quarter 2025 from $2.19 billion (which translates into a debt-to-capitalization of 53.8%) at third-quarter 2024-end.

A strong balance sheet enables the company to reward shareholders with share repurchases. As a reflection of its shareholder-friendly stance, in May 2025, SKYW's existing repurchase plan was increased by $250 million. SkyWest repurchased 244,000 shares for $26.6 million during the third quarter of 2025. As of Sept. 30, 2025, SKYW had $240 million available under its current share repurchase program. Buybacks not only reduce the total outstanding share count, thereby increasing earnings per share, but also signal management's belief in the intrinsic value of the stock.

Long-Term Debt to Capitalization

What Do Earnings Estimates Say for SkyWest?

The positive sentiment surrounding SKYW stock is evident from the fact that the Zacks Consensus Estimate for full-year 2025 and 2026 earnings has been revised upward in the past 90 days. The consensus mark for first-quarter 2026 earnings has also been projected northward in the past 90 days.

The favorable estimate revisions indicate brokers’ confidence in the stock.

Time to Buy SKYW Stock

It is understood that SKYW stock is attractively valued, and an increase in flying contracts is contributing to SKYW’s top line. Fleet modernization techniquesand consistent shareholder-friendly initiatives act as other tailwinds. We believe that the positives surrounding the stock (as highlighted throughout the write-up) outweigh the concerns regarding macroeconomic uncertainty, escalating operating expenses and pilot shortages (bothering regional carriers like SkyWest). We, therefore, suggest investors to add SKYW stock to their portfolios for healthy returns. The company’s Zacks Rank #2 (Buy) further supports our thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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