JetBlue Airways Corporation (NASDAQ:JBLU) emerging out of the blues
In the first few years since its launch, JetBlue Airways Corporation (NASDAQ:JBLU) had been the favorite of the airline industry. Its prices were that of a low-cost carrier (in comparison to the legacy carriers) and the amenities that it offered were more than what most airlines did. Sadly, as legacy competitors worked on their cost-structures and the prices of oil rose, JetBlue saw its advantage shrinking.
The last straw was an influx of excruciatingly lengthy delays and numerous flight cancellations, mostly the result of poor operational practices. Slowly, JetBlue Airways Corporation (NASDAQ:JBLU)’s stock kept getting pulled into the swamp that it had been caught in, for over six years. However, it seems like the company is finally being able to pull itself out of that swamp.
JetBlue Airways Corporation (NASDAQ:JBLU) was always been a growth company. However, of late it had begun to lag behind the airline industry with reference to value creation. Resultantly, JetBlue shares tend to trade around its book value. The company however, is strongly-focused on raising its return on invested-capital by a minimum of one percentage point, annually.
What is a growth company?
A growth company is one that has earnings increasing at a faster rate than the broader economy. Such companies accelerate their rate of earnings and have a tendency to re-invest a major part of their earnings, instead of paying out dividends to their shareholders. In the long run, companies such as these level out and experience steady growth earnings rates.
Investment in a growth company is considered to be an appealing proposition. The share prices usually rise steadily alongside the company’s profits. People may try to buy its shares early, in order to position themselves favorably to the profit when the prices of the shares increase. Investing at the ground-level of a new, growing company can put investors in a good position and companies such JetBlue Airways Corporation (NASDAQ:JBLU) can prove to be a valuable component of investment portfolios. With some companies, it is best to hold onto your horses or shares and wait it out patiently. As the skies clear out so will the skies of the airline industry brighten?