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How Should Investors Play Alaska Air Stock Post Bearish Q1 EPS View?
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Key Takeaways
Alaska Air forecasts Q1 loss of $1.50$2.00 per share, wider than the prior guidance.
ALK cites fuel price surge, with refining margins up 400%, lifting costs to $2.90-$3.00/gal.
Issues like weak demand in Mexico, severe rainstorms and flooding in Hawaii have also hurt ALK's results.
On March 30, 2026, Alaska Air Group, Inc. (ALK - Free Report) unveiled disappointing first-quarter 2026 guidance, citing issues related to higher fuel expenses, operational issues and weather-related disruptions, which pressured results.
A downbeat guidance always acts as a negative indicator of the company’s prospects. Given this backdrop, the question that naturally arises is: Should investors buy, hold, or sell ALK stock now? A more in-depth analysis is needed to make that determination. Before diving into ALK’s investment prospects, let’s take a glance at its financial numbers.
Alaska Air’s Bearish Q1 Outlook
ALK now projects its first-quarter 2026 adjusted loss per share in the range of $1.50-$2.00 compared with the previously guided range of loss per share of 50 cents-$1.50. The downside has been attributed to higher fuel costs, coupled with operational challenges and weather disruptions, which have weighed on unit costs.
It is quite evident as of now that fuel costs have risen owing to higher crude and refining prices, with refining margins being volatile in recent weeks. ALK’s lowest cost source of fuel comes from Singapore (which accounts for almost 20% of ALK’s fuel supply), and these refining margins have grown almost 400% since early February, from an average of 45 cents to $2.25 per gallon.
This has led to economic fuel price expectations in the range of $2.90 to $3.00 per gallon for the first quarter of 2026, which is further likely to hurt the company’s bottom line by at least 70 cents per share.
Apart from the higher fuel price, Alaska Air is grappling with multiple external events. These include weak demand in Mexico due to unrest in Puerto Vallarta, severe rainstorms and historic flooding in Hawaii, which collectively account for nearly 30% of ALK’s capacity. Impacts are being seen in both March and April, including during peak West Coast Spring Break travel periods. With respect to Hawaii, no long-term structural impact is expected, and hence, demand is likely to recover fully.
Had there been no adverse effects from the fuel, Puerto Vallarta and Hawaii storms, ALK’s results would have surpassed the midpoint of original guidance.
What Do Earnings Estimates Say for ALK?
The negative sentiment surrounding ALK stock is evident from the fact that the Zacks Consensus Estimate for first-quarter 2026 and the second quarter of 2026 earnings has been revised downward in the past 90 days. The consensus mark for full-year 2026 earnings has also been projected southward in the past 90 days.
Image Source: Zacks Investment Research
The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Alaska Air’s Price Performance
Shares of ALK have not had a good time on the bourses of late, declining in double digits over the past three months. The disappointing price performance resulted in ALK stock underperforming the Zacks Airline industry as well as other industry players such as Allegiant Travel Company (ALGT - Free Report) and Southwest Airlines Co. (LUV - Free Report) ) in the said time frame.
ALk Stock's Three-Month Price Comparison
Image Source: Zacks Investment Research
Impressive Valuation Picture for ALK Stock
From a valuation perspective, ALK is trading at a discount compared to the industry, going by its forward 12-month price-to-sales ratio.
The stock has a forward 12-month P/S-F12M of 0.27X compared with 0.49X for the industry over the past five years. The company’s forward 12-month P/S-F12M ratio is also below the median level of 0.51X over the past five years. These factors indicate that the stock’s valuation is attractive. ALK has a Value Score of A.
ALK P/S Ratio (Forward 12 Months) Vs. Industry
Image Source: Zacks Investment Research
Final Thoughts
Alaska Air’s first-quarter 2026 earnings expectations have been weighed down by higher fuel costs, weak demand in Mexico due to unrest in Puerto Vallarta, severe rainstorms and historic flooding in Hawaii. Had there been no adverse effects from the fuel, Puerto Vallarta and Hawaii storms, ALK’s results would have surpassed the midpoint of original guidance. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Despite the headwinds, we advise investors not to sell ALK stock now due to the company’s encouraging revenue trends, all thanks to the consistent demand throughout the network. Unit revenues remain in line with previous guidance, and capacity is anticipated toward the high end of the prior guided range, up 2% (prior view: up 1% to 2%). Managed corporate demand remains outstanding, with forward bookings over the next 90 days up more than 25% year over year. With 55% of the quarter’s revenue still to come, the company is all set for peak travel periods during its seasonally strongest quarter. ALK’s attractive valuation also makes it worthwhile.
We advise investors to wait for a better entry point. For those who already own the stock, it will be prudent to stay invested. The company’s current Zacks Rank #3 (Hold) justifies our analysis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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How Should Investors Play Alaska Air Stock Post Bearish Q1 EPS View?
Key Takeaways
On March 30, 2026, Alaska Air Group, Inc. (ALK - Free Report) unveiled disappointing first-quarter 2026 guidance, citing issues related to higher fuel expenses, operational issues and weather-related disruptions, which pressured results.
A downbeat guidance always acts as a negative indicator of the company’s prospects. Given this backdrop, the question that naturally arises is: Should investors buy, hold, or sell ALK stock now? A more in-depth analysis is needed to make that determination. Before diving into ALK’s investment prospects, let’s take a glance at its financial numbers.
Alaska Air’s Bearish Q1 Outlook
ALK now projects its first-quarter 2026 adjusted loss per share in the range of $1.50-$2.00 compared with the previously guided range of loss per share of 50 cents-$1.50. The downside has been attributed to higher fuel costs, coupled with operational challenges and weather disruptions, which have weighed on unit costs.
It is quite evident as of now that fuel costs have risen owing to higher crude and refining prices, with refining margins being volatile in recent weeks. ALK’s lowest cost source of fuel comes from Singapore (which accounts for almost 20% of ALK’s fuel supply), and these refining margins have grown almost 400% since early February, from an average of 45 cents to $2.25 per gallon.
This has led to economic fuel price expectations in the range of $2.90 to $3.00 per gallon for the first quarter of 2026, which is further likely to hurt the company’s bottom line by at least 70 cents per share.
Apart from the higher fuel price, Alaska Air is grappling with multiple external events. These include weak demand in Mexico due to unrest in Puerto Vallarta, severe rainstorms and historic flooding in Hawaii, which collectively account for nearly 30% of ALK’s capacity. Impacts are being seen in both March and April, including during peak West Coast Spring Break travel periods. With respect to Hawaii, no long-term structural impact is expected, and hence, demand is likely to recover fully.
Had there been no adverse effects from the fuel, Puerto Vallarta and Hawaii storms, ALK’s results would have surpassed the midpoint of original guidance.
What Do Earnings Estimates Say for ALK?
The negative sentiment surrounding ALK stock is evident from the fact that the Zacks Consensus Estimate for first-quarter 2026 and the second quarter of 2026 earnings has been revised downward in the past 90 days. The consensus mark for full-year 2026 earnings has also been projected southward in the past 90 days.
The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Alaska Air’s Price Performance
Shares of ALK have not had a good time on the bourses of late, declining in double digits over the past three months. The disappointing price performance resulted in ALK stock underperforming the Zacks Airline industry as well as other industry players such as Allegiant Travel Company (ALGT - Free Report) and Southwest Airlines Co. (LUV - Free Report) ) in the said time frame.
ALk Stock's Three-Month Price Comparison
Impressive Valuation Picture for ALK Stock
From a valuation perspective, ALK is trading at a discount compared to the industry, going by its forward 12-month price-to-sales ratio.
The stock has a forward 12-month P/S-F12M of 0.27X compared with 0.49X for the industry over the past five years. The company’s forward 12-month P/S-F12M ratio is also below the median level of 0.51X over the past five years. These factors indicate that the stock’s valuation is attractive. ALK has a Value Score of A.
ALK P/S Ratio (Forward 12 Months) Vs. Industry
Final Thoughts
Alaska Air’s first-quarter 2026 earnings expectations have been weighed down by higher fuel costs, weak demand in Mexico due to unrest in Puerto Vallarta, severe rainstorms and historic flooding in Hawaii. Had there been no adverse effects from the fuel, Puerto Vallarta and Hawaii storms, ALK’s results would have surpassed the midpoint of original guidance. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Despite the headwinds, we advise investors not to sell ALK stock now due to the company’s encouraging revenue trends, all thanks to the consistent demand throughout the network. Unit revenues remain in line with previous guidance, and capacity is anticipated toward the high end of the prior guided range, up 2% (prior view: up 1% to 2%). Managed corporate demand remains outstanding, with forward bookings over the next 90 days up more than 25% year over year. With 55% of the quarter’s revenue still to come, the company is all set for peak travel periods during its seasonally strongest quarter. ALK’s attractive valuation also makes it worthwhile.
We advise investors to wait for a better entry point. For those who already own the stock, it will be prudent to stay invested. The company’s current Zacks Rank #3 (Hold) justifies our analysis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.