Westjet Analysis

Westjet Airlines Ltd is a Low-cost Canadian airline founded in 1996. Westjet Airlines operates in North America, Europe, Mexico, Central America. It is also the second -largest air carrier in Canada after Air-Canada. The market cap of Westjet is 2.13Billion with 114.07 million shares outstanding. Westjet made its stock market debut on Toronto Stock Exhange on Wednesday, June 13, 1999. As a part of its IPO the share was priced at $10 per share. Within few minutes the stock zoomed to $13 which is around 30% return in one day. The stock was priced at $12.5 at day end. Westjet has been a good investment for investors in its initial year of investment. The shares of Westjet were trading at $18 by year end. Considering the simple annual return of the stock to be 80%.

As, on date Westjet has been considered a low return stock. It has been treated like a Fixed income investment due to its dividend payout history. In 2016, it was named as one of the 25 stocks that were considered as Dividend paying stocks.

Westjet started to pay cash dividends from the year 2010. Since, then it has never stopped paying dividends to its shareholders. Unlike other organizations Westjet has paid cash dividends for at least twice or 2 quarters a year. Below is the attached schedule of the cash dividends provided by Westjet.

Along with dividends the company has consistently announced Share Splits. The company by far has announced 3 share Splits. The 3 share splits have allowed the company to keep the stock price low and attractive amongst investors. Stock splits have impact on the price, which in return. Source:

Price to Earnings= Price/ EPS:

• Year 2013: 14.21
• Year 2014: 16.51
• Year 2015: 6.57
• Year 2016: 9.22
• Year 2017: 10.67
• Current: 8.05

Industry:

• Price to Book Value= Current Market Price/ Book value
• Year 2013: 2.30
• Year 2014: 2.49
• Year 2015: 1.31
• Year 2016: 1.32
• Year 2017: 1.36
• Current: 0.94
• Industry: 1.87
• Return on Assets= Net Income/ Total Assets Year 2013: 6.81
• Year 2014: 6.46
• Year 2015: 7.52
• Year 2016: 5.23
• Year 2017: 4.48
• Current: Q1 -0.57
• Industry 2017: 6.98
• Return on Equity= Net Income/ Shareholders Equity Year 2013: 17.55
• Year 2014: 16.87
• Year 2015: 19.67
• Year 2016: 14.70
• Year 2017: 13.27
• Current: Q1-1.65
• Industry: 2017: 17.21
• Asset Turnover ratio= Sales/Total Asset
• Total asset=average of beginning asset and ending asset.
• Year 2013: 0.94
• Year 2014: 0.92
• Year 2015: 0.73
• Year 2016: 0.70
• Year 2017: 0.74
• Industry: 0.84
• Price to Sales ratio= Total Markte Cap/
• Sales Year 2013: 1.03
• Year 2014: 1.10
• Year 2015: 0.64
• Year 2016: 0.69
• Year 2017: 0.71
• Current: Q2- 0.46
• Industry: 0.92

Overall the company turns out to be undervalued and a good option for investment. But in terms of returns the company or the stock is not been able to match its peers. The stock has drastically underperformed for almost 18 years. Though the industry has not been performing exponentially well compared to other industries, but the stock has lagged to provide good returns when compared with other air carriers.

It would be better to invest in some other airlines instead of Westjet or may be ignore the Sector as a part of Investment considering the low rate of return. The sector is very much dependent on environmental and geo-political factors. Environmental in terms of Aviation fuel and geo-political in terms of production of oil and its imports, exports.