Via blogs.marketwatch.com/greenberg:
Take that , Eric Bolling. That's what I feeling after I smashed him in our Street Fight on CNBC's Fast Money tonight. He tried to challenge my previous comments on Republic Airways, which I've been talking aboout positively (can you believe, that? ) since last April, when the stock was considerably lower. The bottom line of the story, I said, is that Republic is the low-cost regional carrier, has won 100% of its contracts to fly the Embraer 170 Jet (the one that looks like a 737) and has been doing well. Eric, Mr. Oil Trader, tried to hit me on what happens when oil prices soar. I tried to explain that oil costs are passed along to the airlines; Republic is merely an outsourcer that has fixed fee contracts.
Now for a blog exta: My original source on this, Ethan Mcafee of Ramsey Asset Management, loves it as much here as he did when it was lower. He notes that it trades at about 8-times 2008 expected earnings, with earnings last quarter growing at 22%. He says historically it has traded at 10-12 times earnings "when airllines do not have bankruptcy worries Now that everyone is coming out of bankruptcy, I would expect multiple expansion. RJET is growing its business much faster than any of the other players, so I would think it should trade at a higher valuation multple than its peers.
" So, maybe 12-times 2008 earnings, which would be up 50% from here -- and that assumes they sign no new contracts....Last year they signed deals that would increase their long-term EPS by 50%. So, if you assume they signed deals over the next year that would increase their long-term EPS by about 20%, that would get you closer to 70% upside." That's all assuming everything goes as planned, which nothing ever does, but at least now you know the bull case. (I love fighting Eric.)
$22.24 (03/30/07)
