SkyWest's Attractive Valuation and Strong Operational Momentum Position It as a Buy for Growth and Value Investors

The regional airline sector has long been a cornerstone of U.S. air travel, connecting underserved communities to major hubs while serving as a critical partner to legacy carriers. SkyWest Inc. (SKYW) stands out in this space, combining a compelling valuation, robust earnings execution, and a strategically aggressive fleet expansion plan to position itself as a top-tier investment for 2025 and beyond. With a Zacks Rank of #2 (Buy), a VGM Score of A, and a track record of outperforming expectations, SkyWest's stock offers a rare convergence of growth and value appeal.

A High-Grade Investment Profile

SkyWest's current Zacks Rank and Style Scores underscore its strong fundamentals. The company's Growth and Momentum Style Scores of B reflect its ability to deliver consistent earnings and sales growth, while its top-tier VGM Score highlights its dominance across value, growth, and momentum metrics. Analysts project 20.5% year-over-year earnings growth and 10.9% sales growth for 2025, driven by a combination of operational efficiency and strategic capacity expansion.

The stock's performance further validates its momentum. Over the past year, SKYW has surged 30.5%, with a 12.3% gain in the last four weeks alone. This upward trajectory is supported by strong investor sentiment: two analysts have raised 2025 earnings estimates in the past 60 days, pushing the Zacks Consensus Estimate to $9.36 per share. SkyWest's average earnings surprise of 17.1% demonstrates its ability to consistently exceed expectations, a trait that often translates to sustained price appreciation. Historically, SKYW has shown a 54.55% win rate in the 3-day period following earnings beats, with a 63.64% win rate over both 10-day and 30-day horizons. The stock has seen a maximum return of 9.41% on day 59 post-beat, reinforcing the positive momentum following outperformance.

Strategic Fleet Expansion Fuels Long-Term Growth

SkyWest's operational momentum is not just a short-term story—it is underpinned by a meticulously designed fleet expansion strategy. The company has secured 60 firm orders for Embraer E175 aircraft, with purchase rights for an additional 50, valued at $3.6 billion. These deliveries, starting in 2027, will grow SkyWest's E175 fleet to nearly 300 aircraft by 2028, solidifying its position as the largest operator of Embraer regional jets globally.

This expansion is strategically aligned with its partnerships. For instance, 16 of the new E175s will replace older CRJ900 and CRJ700 aircraft under a multiyear agreement with Delta Air Lines, while 44 unassigned aircraft offer flexibility to meet demand from United, American, and Alaska Airlines. SkyWest's ability to defer or terminate deliveries after 2028 provides a critical buffer against macroeconomic risks, such as potential tariffs on Brazilian-built aircraft. Management has signaled a willingness to delay deliveries to avoid absorbing a 50% tariff, prioritizing long-term profitability over short-term constraints.

Beyond new aircraft, SkyWest is optimizing its existing fleet. The company has acquired 30 used CRJ900 airframes, with 24 to be repurposed as spare parts to address supply chain bottlenecks. Additionally, 25 parked dual-class CRJs and over 40 CRJ200s are slated for reactivation, enhancing capacity without significant capital outlays. These moves highlight SkyWest's disciplined approach to capital allocation, balancing growth with cost control.

Financial Strength and Capital Discipline

SkyWest's financials reinforce its investment appeal. The company reported $120 million in net income for Q2 2025, with revenue of $1.03 billion—both exceeding analyst expectations. Its 2025 capital expenditure guidance of $575–$625 million is focused on fleet modernization and infrastructure, while its $207 million remaining share repurchase authorization underscores its commitment to shareholder returns.

The company's balance sheet is also a strength. SkyWest has prioritized debt reduction, with $17.3 million spent on repurchases in Q2 alone. This financial flexibility allows it to navigate uncertainties, such as potential interest rate hikes or supply chain disruptions, without compromising its growth trajectory.

A Resilient Sector Play

The regional airline sector is inherently cyclical, but SkyWest's partnerships with major carriers and its focus on underserved markets position it to outperform. Legacy airlines increasingly rely on regional partners to expand routes, and SkyWest's dual-class service offerings and modernized fleet make it a preferred partner. Additionally, its expansion into high-demand routes via CRJ550 aircraft—expected to grow to 30 by 2025—ensures it can capitalize on rising regional travel demand.

Investment Thesis

SkyWest's combination of a favorable Zacks Rank, strong earnings execution, and strategic fleet expansion creates a compelling case for long-term investors. The company's ability to navigate macroeconomic headwinds while delivering consistent growth metrics makes it a rare buy in the regional airline sector. For growth investors, the 20.5% earnings growth forecast and 30.5% stock price appreciation over the past year signal momentum. For value investors, the stock's attractive valuation—supported by a VGM Score of A and disciplined capital allocation—offers downside protection.

Recommendation: SkyWest (SKYW) is a buy for investors seeking exposure to a resilient regional airline with a clear path to long-term growth. Its strategic flexibility, financial strength, and alignment with industry trends make it a standout candidate in a sector poised for recovery and expansion.