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Here's Why Investors May Bet on Alaska Air (ALK) Stock Now
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Alaska Air Group (ALK - Free Report) is benefitting from an uptick in air-travel demand (particularly on the leisure front). The upsurge in passenger volumes makes the ALK stock an attractive investment opportunity currently.
Let’s delve deep to unearth the factors working in favor of the Zacks Rank #1 (Strong Buy) stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter and current-year earnings have been revised 12.2% and 5.7% upward, over the past 60 days, respectively. Such favorable estimate revisions reflect brokers’ confidence in the stock.
Given the wealth of information at the brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because it serves as a key indicator in determining the price of a stock.
Buoyant Air-Travel Demand: Improvement in air-travel demand bodes well for ALK. On the back of robust air-travel demand and favorable pricing, Alaska Air's top line increased 31% year over year in the March quarter.
ALK estimates second-quarter 2023 total revenues to increase in the 2.5-5.5% band from second-quarter 2022 actuals. To match the upbeat demand, capacity in the June quarter is expected to expand in the 6-9% range. Management expects to boost its fleet and workforce in 2023 to meet the high demand.
Other Favorable Factors: Alaska Air’s fleet-modernization initiatives are encouraging. Moreover, in first-quarter 2023, ALK resumed the share repurchase program by buying 413,554 shares for $18 million. The company anticipates share repurchases of at least $100 million in 2023. The restrictions under the CARES Act prohibited airlines from paying dividends or buying back shares till Sep 30, 2022.
Impressive Price Performance: Driven by the rosy air-travel-demand scenario, shares of ALK have gained 28.7% over the past three months compared with its industry’s appreciation of 26.9%.
Image Source: Zacks Investment Research
Bullish Industry Rank: The industry, to which ALK belongs, currently has a Zacks Industry Rank of 42 (of 250 plus groups). Such a solid rank places the company in the top 17% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a robust stock in a weak industry. Therefore, taking the industry’s performance into consideration becomes imperative.
Copa Holdings is benefiting from an improvement in air-travel demand. In first-quarter 2023, passenger revenues increased 28.5% from first-quarter 2019 levels due to higher yields.
CPA’s focus on its cargo segment is encouraging. In first-quarter 2023, cargo and mail revenues grew 51.8% from first-quarter of 2019 levels on higher cargo volumes and yields.
Copa Holdings' fleet modernization and cost-management efforts are commendable as well. The Zacks Consensus Estimate for CPA’s current-year earnings has been revised 25.08% upward over the past 60 days.
Allegiant is seeing a steady recovery in leisure air-travel demand. In first-quarter 2023, this Las Vegas, NV-based company’s operating revenues grew 29.9% on a year-over-year basis. Passenger revenues, accounting for 93.7% of the top line, increased 31.3% on a year-over-year basis.
Allegiant's fleet-modernization efforts are encouraging. The Zacks Consensus Estimate for ALGT's current-year earnings has been revised 30.95% upward in the past 60 days.
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Here's Why Investors May Bet on Alaska Air (ALK) Stock Now
Alaska Air Group (ALK - Free Report) is benefitting from an uptick in air-travel demand (particularly on the leisure front). The upsurge in passenger volumes makes the ALK stock an attractive investment opportunity currently.
Let’s delve deep to unearth the factors working in favor of the Zacks Rank #1 (Strong Buy) stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter and current-year earnings have been revised 12.2% and 5.7% upward, over the past 60 days, respectively. Such favorable estimate revisions reflect brokers’ confidence in the stock.
Given the wealth of information at the brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because it serves as a key indicator in determining the price of a stock.
Buoyant Air-Travel Demand: Improvement in air-travel demand bodes well for ALK. On the back of robust air-travel demand and favorable pricing, Alaska Air's top line increased 31% year over year in the March quarter.
ALK estimates second-quarter 2023 total revenues to increase in the 2.5-5.5% band from second-quarter 2022 actuals. To match the upbeat demand, capacity in the June quarter is expected to expand in the 6-9% range. Management expects to boost its fleet and workforce in 2023 to meet the high demand.
Other Favorable Factors: Alaska Air’s fleet-modernization initiatives are encouraging. Moreover, in first-quarter 2023, ALK resumed the share repurchase program by buying 413,554 shares for $18 million. The company anticipates share repurchases of at least $100 million in 2023. The restrictions under the CARES Act prohibited airlines from paying dividends or buying back shares till Sep 30, 2022.
Impressive Price Performance: Driven by the rosy air-travel-demand scenario, shares of ALK have gained 28.7% over the past three months compared with its industry’s appreciation of 26.9%.
Image Source: Zacks Investment Research
Bullish Industry Rank: The industry, to which ALK belongs, currently has a Zacks Industry Rank of 42 (of 250 plus groups). Such a solid rank places the company in the top 17% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a robust stock in a weak industry. Therefore, taking the industry’s performance into consideration becomes imperative.
Other Key Picks
Investors interested in the Zacks Airline industry may also consider stocks like Copa Holdings (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) , each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings is benefiting from an improvement in air-travel demand. In first-quarter 2023, passenger revenues increased 28.5% from first-quarter 2019 levels due to higher yields.
CPA’s focus on its cargo segment is encouraging. In first-quarter 2023, cargo and mail revenues grew 51.8% from first-quarter of 2019 levels on higher cargo volumes and yields.
Copa Holdings' fleet modernization and cost-management efforts are commendable as well. The Zacks Consensus Estimate for CPA’s current-year earnings has been revised 25.08% upward over the past 60 days.
Allegiant is seeing a steady recovery in leisure air-travel demand. In first-quarter 2023, this Las Vegas, NV-based company’s operating revenues grew 29.9% on a year-over-year basis. Passenger revenues, accounting for 93.7% of the top line, increased 31.3% on a year-over-year basis.
Allegiant's fleet-modernization efforts are encouraging. The Zacks Consensus Estimate for ALGT's current-year earnings has been revised 30.95% upward in the past 60 days.