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Sun Country Airlines Holdings (SNCY)
NASDAQ:SNCY
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Sun Country Airlines Holdings
(NASDAQ:SNCY)
Rating:74Outperform
Price Target:
$12.50
▲( 13.33% Upside)
Positive Factors
Financial Performance
Sun Country remains in an enviable position from a capital allocation standpoint with limited CapEx needs and low net leverage.
Operational Efficiency
Sun Country has been able to post industry-leading margins that spar with those of the majors.
Revenue Growth
The shift in growth focus from scheduled services to the Cargo segment is paying off, with significant revenue growth and fleet expansion expected.
Negative Factors
Management Challenges
Management turnover is noted as a potential challenge, but it's not expected to hinder the achievement of normalized earnings targets.
Valuation Concerns
The current valuation screens cheap and there is sufficient upside potential when applying the price target methodology.
Sun Country Airlines Holdings (SNCY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$586.88M
Dividend YieldN/A
Average Volume (3M)1.20M
Price to Earnings (P/E)11.3
Beta (1Y)1.02
Revenue Growth2.24%
EPS Growth-20.24%
CountryUS
Employees3,124
SectorIndustrials
Sector Strength93
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)0.72
Shares Outstanding53,207,687
10 Day Avg. Volume782,195
30 Day Avg. Volume1,200,803
Financial Highlights & Ratios
PEG Ratio10.84
Price to Book (P/B)973.08
Price to Sales (P/S)0.00
P/FCF Ratio5.02
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$17.71Price Target Upside60.56% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Sun Country Airlines Holdings Business Overview & Revenue Model
Company DescriptionSun Country Airlines Holdings, Inc., an air carrier company, provides scheduled passenger, air cargo, charter air transportation, and related services in the United States, Latin America, and internationally. As of December 31, 2021, the company operated a fleet of 48 aircraft, including 36 passenger and 12 cargo aircraft. Sun Country Airlines Holdings, Inc. was founded in 1983 and is headquartered in Minneapolis, Minnesota.
How the Company Makes MoneySun Country Airlines Holdings generates revenue through several key streams. The primary source is passenger ticket sales from scheduled flights, where the company offers competitive pricing aimed at leisure travelers. Additional income is derived from ancillary services such as baggage fees, seat selection, and onboard purchases. The company also earns significant revenue from its charter services, offering tailored flight solutions for sports teams, government agencies, and other organizations. Moreover, Sun Country has a cargo operation that contributes to its income, notably through a partnership with Amazon to provide air freight services under the Amazon Air network. This diversification of services allows the company to maintain a robust revenue model, balancing passenger services with charter and cargo operations.
Sun Country Airlines Holdings Financial Statement Overview
Summary
Sun Country Airlines demonstrates strong cash flow management with a robust operating cash flow to net income ratio of 2.48 and a free cash flow to net income ratio of 2.15. The company maintains solid margins but faces challenges with declining net income and potential liquidity issues.Income Statement
Sun Country Airlines shows a strong gross profit margin of 43.76% and a solid net profit margin of 4.96% for TTM (Trailing-Twelve-Months). Revenue growth is modest at 1.41% annually. EBIT and EBITDA margins are healthy at 9.81% and 17.32%, respectively, indicating efficient operations. However, the net income has decreased compared to the previous year, which could be a concern for sustained profitability.75
Positive
Balance Sheet
The debt-to-equity ratio of 0.43 indicates moderate leverage, while the return on equity (ROE) of 8.98% is reasonable but could be improved. The equity ratio of 37.88% reflects a stable capital structure, although higher equity would provide more financial stability. The balance sheet shows a decrease in cash and short-term investments, highlighting potential liquidity challenges.68
Positive
Cash Flow
The company demonstrates strong cash flow management with a robust operating cash flow to net income ratio of 2.48 and a free cash flow to net income ratio of 2.15. Free cash flow growth is stable with only a slight decrease of 0.87% annually, indicating efficient capital expenditure management and strong operational cash generation.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.09B | 1.08B | 1.05B | 894.44M | 623.01M | 401.49M | Gross Profit |
| 477.25M | 748.96M | 269.17M | 177.74M | 135.22M | 18.11M | EBIT |
| 107.06M | 105.99M | 127.50M | -12.64M | 1.27M | 17.39M | EBITDA |
| 188.90M | 210.58M | 226.24M | 123.35M | 200.21M | 91.36M | Net Income Common Stockholders |
| 54.13M | 52.90M | 72.18M | 17.68M | 81.25M | -3.90M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 53.40K | 187.27M | 187.41M | 92.10M | 309.30M | 67.65M | Total Assets |
| 1.59M | 1.63B | 1.62B | 1.52B | 1.38B | 1.05B | Total Debt |
| 262.30K | 619.03M | 697.78M | 629.60M | 545.60M | 536.83M | Net Debt |
| 208.90K | 535.82M | 651.50M | 537.50M | 236.30M | 474.80M | Total Liabilities |
| 989.00K | 1.06B | 1.11B | 1.03B | 889.80M | 769.45M | Stockholders Equity |
| 603.00K | 570.37M | 514.40M | 492.70M | 486.80M | 283.82M |
| Cash Flow | Free Cash Flow | ||||
| 116.51M | 117.53M | -44.04M | -60.50M | 35.70M | -95.92M | Operating Cash Flow |
| 150.57M | 164.86M | 174.12M | 127.40M | 152.00M | 374.00K | Investing Cash Flow |
| 28.69M | 8.40M | -171.23M | -349.30M | -117.00M | -96.03M | Financing Cash Flow |
| -102.01M | -136.47M | -42.14M | 7.00M | 212.40M | 101.54M |
Sun Country Airlines Holdings Technical Analysis
Negative
11.03
Price Trends
11.28
Negative
13.64
Negative
13.03
Negative
Market Momentum
0.16
Positive
46.35
Neutral
6.32
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SNCY, the sentiment is Negative. The current price of 11.03 is below the 20-day moving average (MA) of 11.30, below the 50-day MA of 11.28, and below the 200-day MA of 13.03, indicating a bearish trend. The MACD of 0.16 indicates Positive momentum. The RSI at 46.35 is Neutral, neither overbought nor oversold. The STOCH value of 6.32 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SNCY.
Sun Country Airlines Holdings Risk Analysis
Sun Country Airlines Holdings disclosed 44 risk factors in its most recent earnings report. Sun Country Airlines Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
We operate a single aircraft type and may be dependent on a sole-source for the majority of our aircraft parts at certain locations within our network. Q4, 2024
Sun Country Airlines Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $586.88M | 11.29 | 9.46% | ― | 2.24% | -20.24% | |
69 Neutral | $1.48B | 55.88 | 1.92% | ― | -5.25% | -49.90% | |
65 Neutral | $4.41B | 12.06 | 5.22% | 249.80% | 4.09% | -12.16% | |
60 Neutral | $519.45M | 12.06 | 14.19% | ― | -7.43% | -62.49% | |
56 Neutral | $955.45M | ― | -17.12% | 4.59% | 1.54% | -466.46% | |
56 Neutral | $835.90M | 12.41 | 12.71% | ― | 5.99% | ― | |
44 Neutral | $1.75B | ― | -11.30% | ― | -3.02% | 66.90% |
* Industrials Sector Average
Performance Comparison
SNCY
Sun Country Airlines Holdings
11.03
1.47
15.38%
ATSG
Air Transport Services
22.48
9.08
67.76%
ALGT
Allegiant Travel Company
52.34
3.37
6.88%
JBLU
JetBlue Airways
4.93
-0.44
-8.19%
VLRS
Controladora Vuela Compania de Aviacion SAB de CV
4.40
-3.60
-45.00%
ULCC
Frontier Group Holdings
3.67
-1.65
-31.02%
Sun Country Airlines Holdings Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q1-2025)
| % Change Since: 12.21%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
Sun Country Airlines delivered record-breaking revenue and earnings, expanded its cargo and charter segments, and maintained strong operational metrics. However, challenges in scheduled service ASM and TRASM, temporary cost pressures, and increased operating expenses were noted. The highlights significantly outweigh the lowlights, indicating a strong performance overall.Q1-2025 Updates
Positive Updates
Record-Breaking Revenue and Earnings
Sun Country Airlines reported total revenue of $326.6 million, the highest of any quarter on record, with an operating margin of 17.2% and adjusted operating margin of 18.3%. Diluted adjusted EPS for the quarter was $0.72.
Cargo Segment Expansion
Execution on cargo expansion continues with 3 of the 8 additional committed aircraft inducted, unit revenues growing by about 20% compared to last year, and expectations to double cargo revenue by September 2025.
Charter Revenue Growth
Charter revenue in the first quarter grew 15.6% to $55 million with significant ad hoc charter revenue growth, increasing by 55% compared to last year.
Strong Operational Metrics
Sun Country achieved a controllable completion factor of 99.4% in scheduled business and over 98% on time in cargo business, with a record mishandled bag rate of 1.3.
Airline Leader of the Year Award
Sun Country was awarded Air Transport World's Airline Leader of the Year for 2025.
Negative Updates
Scheduled Service ASM and TRASM Challenges
Sun Country reported a 7% scheduled service ASM growth with a 4.5% TRASM decline, and expects scheduled service ASMs to decrease by about 7% in Q2 with a TRASM improvement of only about 3%.
Temporary Cost Pressures
Temporary cost pressures are expected from the cargo growth in the form of staffing surpluses and lower utilization of the passenger fleet, which will affect unit costs until staffing catches up.
Increase in Operating Expenses
Total operating expense grew 5.5% on 5.8% growth in block hours, with adjusted CASM increasing by 3.5%. Increases in salaries, wages, and non-routine maintenance events contributed to this.
Company Guidance
During Sun Country Airlines' First Quarter 2025 earnings call, the company provided detailed guidance reflecting its strategic focus on leveraging its diversified business model. Notably, Sun Country achieved a record total revenue of $326.6 million, marking a 4.9% increase from Q1 2024, with an operating margin of 17.2% and an adjusted operating margin of 18.3%. The airline reported a 7% growth in scheduled service available seat miles (ASMs), despite a 4.5% decline in total revenue per available seat mile (TRASM). For Q2 2025, Sun Country plans to reduce scheduled service ASMs by about 7%, expecting a TRASM improvement of around 3%. The airline continues to expand its cargo operations, with cargo revenue up 17.6% to $28.2 million in Q1, and anticipates cargo revenue will double by September as it inducts additional aircraft. The company's fleet strategy includes redelivering its first 737-900 and planning further expansions as pilot staffing aligns with fleet growth by Q2 2026. Financially, Sun Country maintains a robust position with liquidity at $227.1 million and a net debt to adjusted EBITDA ratio of 2.0x, with plans to pay $108 million towards debt obligations in 2025. The airline also highlighted its ability to generate high free cash yield and anticipates net debt levels to fall below zero by 2028.Sun Country Airlines Holdings Corporate Events
Executive/Board Changes
Sun Country Airlines Announces Leadership Changes
Neutral
Apr 17, 2025
On April 16, 2025, Sun Country Airlines announced the resignation of Dave Davis as President and Chief Financial Officer, with Bill Trousdale stepping in as interim CFO. Additionally, Gregory Mays stepped down as Chief Operating Officer on April 17, 2025, with Stephen Coley taking over as interim Head of Operations. These transitions are not due to disagreements, and the company plans to search for permanent replacements, ensuring continuity and stability in its operations.
Financial Disclosures
Sun Country Airlines Adjusts Q1 2025 Revenue Guidance
Negative
Mar 11, 2025
Sun Country Airlines Holdings has updated its financial guidance for the first quarter of 2025, adjusting its total revenue expectations to a range of $325 to $330 million, down from the original $330 to $340 million. The company also anticipates a lower operating income margin, aligning with the lower end of its original guidance. These adjustments reflect recent performance trends and economic conditions, impacting the company’s operational outlook and potentially influencing stakeholder expectations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.