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JetBlue Earnings Could Propel Stock to Break Out: Terranova

JetBlue landed on the Fast Money trader radar after the airlines said fourth quarter profit nearly tripled on a sharp increase in passengers.

The company also said traffic in the last three months of the year rose 11 percent as it added new destinations and flights.

"They've been able to control cost and increase revenue," says Joe Terranova. "That leads to expanding margins. I'd expect the stock to break out."

Two particular areas of strength for the company were Boston and the Caribbean.

Widely considered a leisure airline by the public, JetBlue says about one in three customers out of Boston is now traveling for work. Business travelers are critical to airlines because they travel more often and are a steadier source of revenue than leisure fliers.

JetBlue also said that while it expanded in the Caribbean, other airlines have been pulling back, setting the stage for fare increases and a better control of the market.

Of course, there is some cause for concern. The airline said that although 2012 is off to a strong start, it will have significant maintenance expenses this year. That's because a slew of planes it bought during its rapid expansion in 2000 are now due for extensive inspections.

Looking at the numbers more closely. Net income rose to $23 million, or 8 cents per share, in the three months ended Dec. 31. That's up from $8 million, or 3 cents per share, a year earlier.

Revenue rose 22 percent to $1.15 billion. Higher ticket prices and fees drove its yield up 11 percent. The 2011 quarter compares with the last quarter of 2010, when a big winter storm that walloped its bases in New York and Boston cost JetBlue $30 million.

Analysts expected earnings of 4 cents per share on revenue of $1.13 billion, according to FactSet.





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Trader disclosure: On Jan 26, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova is long XOM; Terranova is long TRLG; Terranova is long CNX; Terranova is long SBUX; Terranova is long SNDK; Terranova is long CSCO; Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long EMC; Terranova is long AXP; Terranova is long F; Terranova is long JOY; Terranova is long MCD; Terranova is long OXY; Terranova is long MCD; Terranova is long OXY; Terranova is long IBM; Terranova is long SU; Terranova is long MA; Seymour is long F; Seymour is long AAPL; Seymour is long BAC; Seymour is long CIB; Najarian is long AKS; Najarian is long BAC; Najarian is long PNC; Najarian is long WFC; Najarian is long GDX; Najarian is long NFLX; Najarian is long MSFTl Najarian is long IBM; Finerman is long (JPM); Finerman is long (BAC); Finerman is long (PLCM); Finerman is long (IBM)

For Ron Insana
No Dislcosures

For Mike Khouw
No Disclosures, all holdings in separately managed accounts

For Karen Finerman
Finerman’s fund is long (AAPL)
Finerman’s fund is long (JPM)
Finerman’s fund is long (PLCM)
Finerman’s fund is short (SPY)
Finerman’s fund is short (MDY)

For Marc Riddick
No Disclosures

For Carter Worth
No Disclosures

For David Barger
No disclosures

For Richard Repetto
Sandler O'Neill expects to receive or intends to seek compensation from E*TRADE Financial Corporation for investment banking services in the next three months. As of the date of this report, Sandler O'Neill currently acts as a market maker in the securities of E*TRADE Financial Corporation. E*TRADE Financial Corporation is a client of and receives non-investment banking securities-related services from Sandler O'Neill (based on information as of the end of the month immediately preceding the date of this report). An affiliate of Sandler O'Neill has received compensation from E*TRADE Financial Corporation for providing products or services other than investment banking services in the 12-month period ending as of the last calendar quarter.

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