It has been about a month since the last earnings report for Alaska Air Group (
ALK Quick Quote ALK - Free Report) . Shares have lost about 5.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Alaska Air due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Alaska Air Group Beats on Q4 Earnings
Alaska Air Group reported fourth-quarter 2018 earnings per share (excluding 56 cents from non-recurring items) of 75 cents, surpassing the Zacks Consensus Estimate of 73 cents.
Revenues came in at $2,064 million, above the Zacks Consensus Estimate of $2057.3 million. The top line also rose year over year. Passenger revenues, accounting for a bulk (92.4%) of the top line, were up 6% on a year-over-year basis. Operating Statistics Airline traffic, measured in revenue passenger miles, inched up 1% year over year in the reported quarter. Capacity or available seat miles expanded 1.1%. Load factor (percentage of seats occupied by passengers) contracted 10 basis points to 83.3% as capacity expansion outweighed traffic growth in the reported quarter. Total revenue per available seat mile (RASM: a key measure of unit revenues) increased 5.2% year over year to 12.84 cents in the quarter under discussion. Meanwhile, yield augmented 5.2% to 14.24 cents. Operating Expenses & Income
In the reported quarter, total operating expenses were up 12% year over year to $2,018 million. Operating income plunged 66% from the prior-year quarter to $46 million. Fuel price (economic) was $2.35 per gallon, up 17.5%.
Consolidated cost per available seat mile — excluding fuel and special items — nudged up 3.1% to 8.95 cents. Liquidity & Buybacks At the end 2018, the company had $1,236 million in cash and marketable securities compared with $1,621 million at the end of 2017. Alaska Air Group exited the quarter with long-term debt of $1,617 million compared with $2,262 million at the end of 2017. Adjusted debt-to-capitalization ratio was 47% as compared to 53% at 2017 end. Moreover, the carrier repurchased 776,186 shares for approximately $50 million in 2018. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -47.87% due to these changes.
Currently, Alaska Air has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Alaska Air has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.