Here's Why Investors Should Avoid SkyWest Stock for Now

SkyWest SKYW is facing significant challenges from surging operating expenses and a deteriorating liquidity position, which are adversely affecting the company’s bottom line and making it an unattractive choice for investors’ portfolios.

Let’s delve deeper.

SKYW: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for the December quarter’s earnings has been revised 3.02% downward in the past 60 days. Meanwhile, for 2026, the consensus mark for earnings has been revised 2.09% downward in the same time frame.

The unfavorable estimate revision indicates brokers’ lack of confidence in the stock.

Dim Price Performance: The company’s price trend reveals that its shares have fallen 2.9% in the year-to-date period, compared with the Transportation - Airline industry’s 3% rise.

Weak Zacks Rank: SKYW currently has a Zacks Rank #4 (Sell).

Bearish Industry Rank: The industry to which SKYW belongs currently has a Zacks Industry Rank of 157 (out of 243). Such an unfavorable rank places it in the bottom 35% of Zacks Industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.

A mediocre stock within a strong group is likely to outperform a robust stock in a weak industry. Hence, reckoning the industry’s performance becomes imperative.

Headwinds: SkyWest is facing mounting pressure on its bottom line as rising expenses continue to strain its financial stability. In the second quarter of 2025, total operating expenses surged 15.7% year over year, driven primarily by escalating labor and maintenance costs.

Labor costs, which include salaries and benefits, accounted for 45.1% of total expenses and climbed 9.9% from the prior year, while maintenance expenses jumped 30.3% year over year. These rising costs are weighing heavily on the company’s profitability and overall financial health.

Adding to the concern, SkyWest’s liquidity position has weakened over time. The company’s current ratio declined from 1.17 in 2022 to 0.78 in 2024, and further fell to 0.73 in the second quarter of 2025, raising questions about its ability to meet short-term obligations.

Stocks to Consider

Investors interested in the Zacks Transportation sector may consider Global Ship Lease GSL and Wabtec WAB.

GSL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

GSL has an encouraging earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 13.16%.

A look at the company’s price trend reveals that its shares have surged 25.6% in the year-to-date period, surpassing the Zacks Transportation - Shipping industry’s 2.2% decline.

WAB currently carries a Zacks Rank #2.

Wabtec has an expected earnings growth rate of 17.59% for the current year. The company has an encouraging earnings surprise history. Its earnings topped the Zacks Consensus Estimate in three of the trailing four quarters, and missed in the remaining, delivering an average beat of 5.41%.

A look at the company’s price trend reveals that its shares have surged 1.4% in a year, surpassing the Zacks Transportation - Equipment and Leasing industry’s 21.1% fall.

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

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