Hawaiian Holdings Is Getting Serious About Share Buybacks

Hawaiian Airlines parent company Hawaiian Holdings (NASDAQ: HA) has achieved stellar earnings growth over the past several years. For a while, the stock price kept up, rising from less than $6 in mid-2013 to a high around $60 late last year.

However, shares of Hawaiian Holdings fell as far as the low $30 range last month, and have been trading around $40 recently. That gives them a bargain valuation of just seven times earnings. Hawaiian is taking advantage of this rock-bottom valuation by significantly ramping up its buyback activity.

Just a few years ago, Hawaiian Holdings was producing consistently negative free cash flow, due to its relatively low profit margins and high capital spending. But beginning in 2015, the company's earnings power surged just as capex started to moderate. As a result, Hawaiian is now generating lots of free cash flow, despite making big contributions to its pension and other post-retirement plans.

Source: Fool.com