Alaska Air Group, Inc.

Alaska Air Group, Inc.'s (ALK - Snapshot Report) share price has been on a nice rally since early October in response to falling energy prices. Analysts are bullish on the company, with the next-year estimate projecting substantial earnings growth.

Company Description

Alaska Air Group, through its subsidiaries Alaska Airlines, Inc. and Horizon Air Industries operates as an airline company primarily serving the western portion of the United States. The company was founded in 1932 and has a market cap of $1.05 billion.

Third-Quarter Results

Alaska Air Group reported third-quarter results in late October that were ahead of estimates when removing one-time items. Sales ticked higher, up 7.7% from last year to $1.07 billion. But due to losses on energy hedges and one-time charges, the company's income dipped into the red, coming in at a loss of $86.5 million.

Adjusted Income

When removing one-time items, the group would have posted earnings of $1.10 per share, ahead of analyst estimates of 93 cents.

The CEO Speaks

Falling energy prices should help Alaska Air Group boost its income, but company CEO Bill Ayers was cautious when creating expectations, saying that "the volatility of oil prices and the weak economy make this an extremely challenging environment."

Analyst Estimates

The analyst community is more bullish, with the next-year estimate pegged at $3.14 per share, a massive earnings growth projection of close to 1000%.

Cash and Convertibles

The company also reported that it had accumulated $1.18 billion in cash and marketable securities as of Oct 21, 2008, providing stability against market volatility and constricted credit.

The Chart

Shares of ALK have been advancing since early October, climbing from a short-term low just below $13 to a recent high above $30, a key level of resistance from May of 2007. Moving forward, this company will need to effectively manage its hedging operations and leverage lower energy prices to drive earnings. Take a look at the chart below.