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Here's Why You Should Invest in Alaska Air Group (ALK) Stock
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The continuous improvement of air travel demand along with appropriate pricing is favoring Alaska Air Group (ALK - Free Report) .
Let’s delve into the factors that make it an investment-worthy stock.
Earnings Expectations:
Earnings growth often indicates a company’s prospects. For first-quarter 2023, ALK’s earnings are expected to register 72.9% growth on a year-over-year basis. For full-year 2023 & 2024, the company’s earnings are expected to go up by 32.6% and 19.9% on a year-over-year basis, respectively.
The Zacks Consensus Estimate for the company’s earnings is pegged at a loss of 36 cents for first-quarter 2023 and at $5.77 for the full year. This has been revised upward by 29.4% and 12% respectively in the past 60 days. The favorable estimate revision reflects brokers’ confidence in the stock.
Price performance:
ALK has outperformed the Zacks Airline industry in the past six months. The stock has risen 3.3% compared with the industry's growth of 2.7% in the same time frame.
Image Source: Zacks Investment Research
Earnings History
ALK has a stellar earning surprise history having beaten the Zacks Consensus Estimate for earnings in all four trailing quarters. The average surprise is 9%.
Bullish Industry Rank:
The industry to which Alaska Air Group belongs currently has a Zacks Industry Rank of 48 (of 250 plus groups). Such a solid rank places the industry in the top 19% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group it belongs to.
In fact, a mediocre stock in a healthy group is likely to outperform a robust stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Attractive Rank & Style Score
ALK currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company seems to be an appropriate investment at the moment. You can seethe complete list of today’s Zacks #1 Rank stocks here.
Other Positive Factors
The improved air travel demand seems to benefit ALK and the effect of the same is visible in the recent fourth-quarter earnings of the company. The company reported earnings of 92 cents per share, outperforming the Zacks Consensus Estimate by 2.2%. The top line increased by 31% on a year-over-year basis, thanks to a 91% increase in passenger revenues.
The company expects a 23-29% increase in the top line of the company during the first quarter of 2023. ALK has been increasing its capacity to meet the upbeat demand. Capacity is expected to increase 11-14% in the first quarter of 2023.
The company has also taken noteworthy steps to attract customers. One such major step includes the Flight Pass subscription service whereby customers are allowed to earn miles and book flights in advance with no blackout dates.
The airline has also been taking steps to modernize its fleet. In March 2022, the company modified its Boeing order to include the bigger MAX 10s and longer-range MAX 8s. The carrier’s contract consists of 145 firm orders and options for Boeing 737-9 aircraft, scheduled for delivery between 2021 and 2026.
As a shareholder-friendly move, the airline will resume share buybacks shortly, following the lifting of restrictions under the CARES Act.Repurchases are anticipated to lie between $75 million and $100 million in 2023.
Other Stocks to Consider
Investors interested in the Zacks Airline industry may also consider the following stocks:
American Airlines (AAL - Free Report) is being aided by the improved air travel demand situation. In the fourth quarter of 2022, AAL reported better-than-expected results. The company reported earnings of $1.17 per share, outperforming the Zacks Consensus Estimate by 2.63%. For first-quarter 2023, AAL’s earnings are expected to register 100.4% growth on a year-over-year basis. For 2023, the company’s earnings are expected to grow 332% on a year-over-year basis.
The Zacks consensus for the company’s earnings is pegged at 1 cent for first-quarter 2023 and $2.16 for the full year. This has been revised upward by 103.2% and 31.7%, respectively, in the past 60 days. The company currently holds a Zacks Rank of 2.
United Airlines (UAL - Free Report) currently carrying a Zacks Rank of 2, is seeing a steady recovery in domestic and leisure air travel demand. On the back of upbeat air-travel demand, UAL was profitable in the fourth quarter of 2022. The fourth quarter was the third consecutive profitable quarter at UAL. Driven by solid demand, management expects total revenue per available seat mile (TRASM) to grow almost 25% year over year for the first quarter of 2023. Total revenues are anticipated to grow almost 50% year over year.
The Zacks Consensus Estimate of the company for first-quarter 2023 has been revised upward by 270% in the past 60 days.
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Here's Why You Should Invest in Alaska Air Group (ALK) Stock
The continuous improvement of air travel demand along with appropriate pricing is favoring Alaska Air Group (ALK - Free Report) .
Let’s delve into the factors that make it an investment-worthy stock.
Earnings Expectations:
Earnings growth often indicates a company’s prospects. For first-quarter 2023, ALK’s earnings are expected to register 72.9% growth on a year-over-year basis. For full-year 2023 & 2024, the company’s earnings are expected to go up by 32.6% and 19.9% on a year-over-year basis, respectively.
The Zacks Consensus Estimate for the company’s earnings is pegged at a loss of 36 cents for first-quarter 2023 and at $5.77 for the full year. This has been revised upward by 29.4% and 12% respectively in the past 60 days. The favorable estimate revision reflects brokers’ confidence in the stock.
Price performance:
ALK has outperformed the Zacks Airline industry in the past six months. The stock has risen 3.3% compared with the industry's growth of 2.7% in the same time frame.
Image Source: Zacks Investment Research
Earnings History
ALK has a stellar earning surprise history having beaten the Zacks Consensus Estimate for earnings in all four trailing quarters. The average surprise is 9%.
Bullish Industry Rank:
The industry to which Alaska Air Group belongs currently has a Zacks Industry Rank of 48 (of 250 plus groups). Such a solid rank places the industry in the top 19% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group it belongs to.
In fact, a mediocre stock in a healthy group is likely to outperform a robust stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Attractive Rank & Style Score
ALK currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company seems to be an appropriate investment at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Positive Factors
The improved air travel demand seems to benefit ALK and the effect of the same is visible in the recent fourth-quarter earnings of the company. The company reported earnings of 92 cents per share, outperforming the Zacks Consensus Estimate by 2.2%. The top line increased by 31% on a year-over-year basis, thanks to a 91% increase in passenger revenues.
The company expects a 23-29% increase in the top line of the company during the first quarter of 2023. ALK has been increasing its capacity to meet the upbeat demand. Capacity is expected to increase 11-14% in the first quarter of 2023.
The company has also taken noteworthy steps to attract customers. One such major step includes the Flight Pass subscription service whereby customers are allowed to earn miles and book flights in advance with no blackout dates.
The airline has also been taking steps to modernize its fleet. In March 2022, the company modified its Boeing order to include the bigger MAX 10s and longer-range MAX 8s. The carrier’s contract consists of 145 firm orders and options for Boeing 737-9 aircraft, scheduled for delivery between 2021 and 2026.
As a shareholder-friendly move, the airline will resume share buybacks shortly, following the lifting of restrictions under the CARES Act.Repurchases are anticipated to lie between $75 million and $100 million in 2023.
Other Stocks to Consider
Investors interested in the Zacks Airline industry may also consider the following stocks:
American Airlines (AAL - Free Report) is being aided by the improved air travel demand situation. In the fourth quarter of 2022, AAL reported better-than-expected results. The company reported earnings of $1.17 per share, outperforming the Zacks Consensus Estimate by 2.63%. For first-quarter 2023, AAL’s earnings are expected to register 100.4% growth on a year-over-year basis. For 2023, the company’s earnings are expected to grow 332% on a year-over-year basis.
The Zacks consensus for the company’s earnings is pegged at 1 cent for first-quarter 2023 and $2.16 for the full year. This has been revised upward by 103.2% and 31.7%, respectively, in the past 60 days. The company currently holds a Zacks Rank of 2.
United Airlines (UAL - Free Report) currently carrying a Zacks Rank of 2, is seeing a steady recovery in domestic and leisure air travel demand. On the back of upbeat air-travel demand, UAL was profitable in the fourth quarter of 2022. The fourth quarter was the third consecutive profitable quarter at UAL. Driven by solid demand, management expects total revenue per available seat mile (TRASM) to grow almost 25% year over year for the first quarter of 2023. Total revenues are anticipated to grow almost 50% year over year.
The Zacks Consensus Estimate of the company for first-quarter 2023 has been revised upward by 270% in the past 60 days.