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Alaska Air Group Benefits From Multiple Tailwinds: Buy Now
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We have issued an updated research report on Alaska Air Group, Inc. (ALK - Free Report) on Dec 11.
The company benefits from multiple tailwinds and is an appropriate investment option at the moment.
Factors Driving the Company
The Seattle, WA-based carrier is gaining momentum on the back of impressive growth in passenger revenues. Strong demand for air travel is favoring the growth in passenger revenues. In fact, passenger revenues increased 4% year over year in the first nine months of 2018 and is expected to boost the top line in the fourth quarter as well. Such a scenario has propelled the company to raise fourth-quarter forecast for unit revenues at its investor day in November 2018. Alaska Air Group expects fourth-quarter revenue per available seat mile in the range of 12.60-12.80 cents compared with the previous guidance of 12.40-12.60 cents.
Furthermore, we are positive about the company’s efforts to reward shareholders in the form of dividends and buybacks. In January 2018, Alaska Air Group hiked quarterly dividend by 7% to 32 cents per share from the previous count of 30 cents. Such shareholder-friendly moves underline the company’s strong financial position and instill investors’ confidence in the business.
Moreover, Alaska Air Group's efforts to reduce debt levels raise optimism on the stock. As of Sep 30, 2018, the company had long-term debt of $1,684 million compared with $2,262 million at the end of 2017. Adjusted debt-to-capitalization ratio was 49% compared with 53% at the end of 2017. Notably, the Zacks Consensus Estimate has been revised 40.5% upward in the past 30 days for current-quarter earnings. The favorable estimate revision reflects brokers’ confidence in the stock.
Considering the wealth of information at their disposal, it is in the best interest of investors to be guided by broker advice and the direction of their estimate revisions. This is because the direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Additionally, Alaska Air Group, which carries a Zacks Rank #2 (Buy), flaunts an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three scores. Our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choice.
In light of the above tailwinds, we believe that investors should add Alaska Air Group to their portfolio now.
Shares of Air France, Frontline and Spirit Airlines have rallied 24.8%, 12.2% and 64.1% in the past six months, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Alaska Air Group Benefits From Multiple Tailwinds: Buy Now
We have issued an updated research report on Alaska Air Group, Inc. (ALK - Free Report) on Dec 11.
The company benefits from multiple tailwinds and is an appropriate investment option at the moment.
Factors Driving the Company
The Seattle, WA-based carrier is gaining momentum on the back of impressive growth in passenger revenues. Strong demand for air travel is favoring the growth in passenger revenues. In fact, passenger revenues increased 4% year over year in the first nine months of 2018 and is expected to boost the top line in the fourth quarter as well. Such a scenario has propelled the company to raise fourth-quarter forecast for unit revenues at its investor day in November 2018. Alaska Air Group expects fourth-quarter revenue per available seat mile in the range of 12.60-12.80 cents compared with the previous guidance of 12.40-12.60 cents.
Furthermore, we are positive about the company’s efforts to reward shareholders in the form of dividends and buybacks. In January 2018, Alaska Air Group hiked quarterly dividend by 7% to 32 cents per share from the previous count of 30 cents. Such shareholder-friendly moves underline the company’s strong financial position and instill investors’ confidence in the business.
Moreover, Alaska Air Group's efforts to reduce debt levels raise optimism on the stock. As of Sep 30, 2018, the company had long-term debt of $1,684 million compared with $2,262 million at the end of 2017. Adjusted debt-to-capitalization ratio was 49% compared with 53% at the end of 2017. Notably, the Zacks Consensus Estimate has been revised 40.5% upward in the past 30 days for current-quarter earnings. The favorable estimate revision reflects brokers’ confidence in the stock.
Considering the wealth of information at their disposal, it is in the best interest of investors to be guided by broker advice and the direction of their estimate revisions. This is because the direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Alaska Air Group, Inc. Price
Alaska Air Group, Inc. Price | Alaska Air Group, Inc. Quote
Additionally, Alaska Air Group, which carries a Zacks Rank #2 (Buy), flaunts an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of all three scores. Our research shows that stocks with VGM Scores of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 make solid investment choice.
In light of the above tailwinds, we believe that investors should add Alaska Air Group to their portfolio now.
Other Stocks to Consider
Investors interested in the Zacks Transportation sector may also consider Air France-KLM SA (AFLYY - Free Report) , Frontline Ltd. (FRO - Free Report) and Spirit Airlines, Inc. (SAVE - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Air France, Frontline and Spirit Airlines have rallied 24.8%, 12.2% and 64.1% in the past six months, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>