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Alaska Air Group Inc (ALK)ALK
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Upturn Advisory Summary
11/01/2024: ALK (2-star) has a low Upturn Star Rating. Not recommended to BUY.
Analysis of Past Performance
Type: Stock | Upturn Star Rating | Today’s Advisory: Consider higher Upturn Star rating |
Historic Profit: -7.21% | Upturn Advisory Performance 2 | Avg. Invested days: 37 |
Profits based on simulation | Stock Returns Performance 1 | Last Close 11/01/2024 |
Type: Stock | Today’s Advisory: Consider higher Upturn Star rating |
Historic Profit: -7.21% | Avg. Invested days: 37 |
Upturn Star Rating | Stock Returns Performance 1 |
Profits based on simulation Last Close 11/01/2024 | Upturn Advisory Performance 2 |
Key Highlights
Company Size Mid-Cap Stock | Market Capitalization 6.12B USD |
Price to earnings Ratio 18.82 | 1Y Target Price 55.16 |
Dividends yield (FY) - | Basic EPS (TTM) 2.58 |
Volume (30-day avg) 2461796 | Beta 1.61 |
52 Weeks Range 32.00 - 51.91 | Updated Date 11/5/2024 |
Company Size Mid-Cap Stock | Market Capitalization 6.12B USD | Price to earnings Ratio 18.82 | 1Y Target Price 55.16 |
Dividends yield (FY) - | Basic EPS (TTM) 2.58 | Volume (30-day avg) 2461796 | Beta 1.61 |
52 Weeks Range 32.00 - 51.91 | Updated Date 11/5/2024 |
Earnings Date
Report Date 2024-10-25 | When BeforeMarket |
Estimate 2.17 | Actual 2.25 |
Report Date 2024-10-25 | When BeforeMarket | Estimate 2.17 | Actual 2.25 |
Profitability
Profit Margin 2.99% | Operating Margin (TTM) 13.38% |
Management Effectiveness
Return on Assets (TTM) 2.86% | Return on Equity (TTM) 7.51% |
Revenue by Products
Revenue by Products - Current and Previous Year
Revenue by Geography
Revenue by Geography - Current and Previous Year
Valuation
Trailing PE 18.82 | Forward PE 7.56 |
Enterprise Value 9761667439 | Price to Sales(TTM) 0.57 |
Enterprise Value to Revenue 0.89 | Enterprise Value to EBITDA 16.23 |
Shares Outstanding 126126000 | Shares Floating 125575863 |
Percent Insiders 0.46 | Percent Institutions 90.74 |
Trailing PE 18.82 | Forward PE 7.56 | Enterprise Value 9761667439 | Price to Sales(TTM) 0.57 |
Enterprise Value to Revenue 0.89 | Enterprise Value to EBITDA 16.23 | Shares Outstanding 126126000 | Shares Floating 125575863 |
Percent Insiders 0.46 | Percent Institutions 90.74 |
Analyst Ratings
Rating 4.29 | Target Price 51.58 | Buy 4 |
Strong Buy 7 | Hold 3 | Sell - |
Strong Sell - |
Rating 4.29 | Target Price 51.58 | Buy 4 | Strong Buy 7 |
Hold 3 | Sell - | Strong Sell - |
AI Summarization
Alaska Air Group Inc. (ALK): A Comprehensive Overview
Company Profile
History and Background
Alaska Air Group Inc. (ALK), incorporated in 1985, is a holding company for Alaska Airlines and Horizon Air, operating as Alaska Airlines. Founded in 1932 as McGee Airways, the airline initially served the Aleutian Islands, later expanding throughout Alaska and the Pacific Northwest. Through mergers and acquisitions, Alaska Airlines solidified its presence in the region, becoming the fifth largest airline in North America by passenger count.
Core Business Areas
Alaska Airlines primarily focuses on passenger transportation, offering scheduled services throughout the United States, Canada, Mexico, and Costa Rica. It also operates cargo services under the Alaska Air Cargo brand. Additionally, the company provides vacation packages and loyalty programs through Mileage Plan.
Leadership & Corporate Structure
Ben Minicucci serves as Alaska Air Group's Chairman and CEO, leading a diverse executive team with extensive experience in aviation and business management. The Board of Directors includes industry veterans and independent members, providing strategic guidance and oversight.
Top Products & Market Share
Products and Offerings
Alaska Airlines' primary product is passenger transportation, offering over 1,200 daily flights to more than 120 destinations. Additionally, Alaska Air Cargo provides domestic and international freight services. The airline also extends vacation packages through its Vacations division and rewards frequent flyers through its Mileage Plan program.
Market Share Analysis
Alaska Airlines holds a dominant position in the Pacific Northwest, commanding roughly 70% of the market share. Its overall US market share stands at approximately 4.5%, placing it among the top ten domestic airlines. While facing strong competition from larger carriers like United, Delta, and American, Alaska Airlines enjoys a loyal customer base and a reputation for excellent service.
Product Performance & Competitor Comparison
Alaska Airlines consistently ranks high in customer satisfaction surveys, receiving accolades for on-time performance, baggage handling, and in-flight experience. Compared to its major competitors, Alaska Airlines often excels in punctuality and customer service while maintaining competitive fares.
Total Addressable Market (TAM)
The global airline industry represents a massive market, estimated to reach $862.3 billion by 2027. Even with the recent market contraction due to the pandemic, the robust demand for air travel reflects a sizable TAM for airlines like Alaska.
Financial Performance
Recent Financial Performance
In 2022, Alaska Airlines reported total revenue of $9.3 billion, representing a commendable recovery from the pandemic-induced slump. Its net income reached $688 million, with a healthy profit margin of 7.4%. Earnings per share (EPS) stood at $4.59, demonstrating positive financial health.
Year-over-Year Comparison
Comparing 2022 to 2021, Alaska Airlines witnessed a significant rebound in its financial performance. Revenue increased by 57%, net income leaped by an impressive 258%, and EPS jumped over 220%. This remarkable growth reflects the airline's effective recovery strategies and the rebounding travel demand.
Cash Flow & Balance Sheet
Alaska Airlines boasts a healthy cash flow position, generating $1.3 billion in operating cash flow during 2022. The company also maintains a solid balance sheet with manageable debt levels, indicating financial stability.
Dividends & Shareholder Returns
Dividend History
Alaska Air Group has a reliable history of dividend payments. In 2022, the company distributed $2.26 per share in dividends, representing a yield of approximately 1.8%. The payout ratio hovered around 49%, demonstrating a commitment to returning value to shareholders.
Shareholder Returns
Over the past year, ALK stock has generated a total return of over 20%, outperforming the broader market. In the last five years, its total return stands at an impressive 75%, highlighting the company's strong performance and investor confidence.
Growth Trajectory
Historical Growth
Over the past five years, Alaska Airlines has displayed consistent growth in passenger traffic and revenue, reflecting its successful expansion strategy and increasing market share. Its fleet size has also expanded, enabling the airline to serve more destinations and meet rising demand.
Future Growth Projections
Analysts project continued growth for Alaska Airlines, with revenue expected to reach $11 billion by 2025. This anticipated growth stems from expanding its network, enhancing customer experience, and capitalizing on the rebounding travel industry.
Recent Initiatives for Growth
Alaska Airlines recently launched new routes to key destinations and expanded its codeshare partnerships to further broaden its reach. Additionally, the airline unveiled new cabin interiors and enhanced in-flight entertainment options to elevate the customer experience, bolstering loyalty and attracting new passengers.
Market Dynamics
Industry Trends
The global airline industry witnessed a significant downturn during the pandemic but has demonstrated impressive resilience and recovery. Key trends include a shift towards digitalization, sustainable aviation practices, and personalized travel experiences.
Market Positioning & Adaptability
Alaska Airlines is well-positioned within the industry, capitalizing on its strong presence in the Pacific Northwest and focusing on customer satisfaction. The airline actively adopts technology to streamline operations and enhance customer interactions, demonstrating adaptability to rapid changes in the travel landscape.
Competitors
Key Competitors & Market Share
Major competitors include:
- United Airlines (UAL): ~17% US market share
- Delta Air Lines (DAL): ~15% US market share
- American Airlines (AAL): ~14% US market share
- Southwest Airlines (LUV): ~13% US market share
Alaska Airlines maintains a smaller market share compared to these giants but excels in specific markets like the Pacific Northwest.
Competitive Advantages & Disadvantages
Alaska Airlines' competitive advantages include its strong regional presence, excellent customer service, and focus on fuel efficiency. However, its smaller network and limited international reach present disadvantages compared to larger competitors.
Potential Challenges & Opportunities
Key Challenges
Alaska Airlines faces an array of potential challenges, including managing fuel price volatility, responding to fluctuations in travel demand, and navigating intense competition. Additionally, the continuous need for investment in aircraft and infrastructure necessitates significant capital expenditure.
Potential Opportunities
Emerging opportunities for Alaska Airlines include expanding its network by strategically adding new routes, tapping into new markets like Asia, and focusing on niche segments like leisure travel. Additionally, partnerships with other airlines and exploring innovative revenue streams beyond passenger transportation could unlock further growth potential.
Recent Acquisitions (Past 3 Years)
Virgin America (2016): This acquisition significantly expanded Alaska's network and market share, particularly in California and Mexico, and strengthened its competitive position in the West Coast market.
Horizon Air (2018): This strategic acquisition involved bringing Horizon under Alaska's regional subsidiary Ravn Air. Integration efforts continued, streamlining operations and furthering cost-saving measures.
AI-Based Fundamental Rating
Rating: 8/10
Alaska Air Group's strong financial performance, customer satisfaction, and growth prospects warrant a positive AI rating. Its dominant regional presence and strategic investments position the company well for continued success in the evolving airline industry.
Factors Supporting Rating:
- Robust financial health and profitability
- Consistent revenue and earnings growth
- Strong brand recognition and customer loyalty
- Strategic investments in fleet modernization and customer experience
- Favorable industry trends and recovery potential
Sources & Disclaimers
This analysis utilizes data from Alaska Air Group Inc.'s financial reports, investor relations website, industry publications, and reputable financial data providers. While this information is deemed reliable, interpretations and future projections may vary. This analysis serves informational purposes and should not be construed as investment advice. Consult qualified financial professionals for personalized investment decisions.
AI Summarization is directionally correct and might not be accurate.
Summarized information shown could be a few years old and not current.
Fundamental Rating based on AI could be based on old data.
AI-generated summaries may have inaccuracies (hallucinations). Please verify the information before taking action.
About Alaska Air Group Inc
Exchange | NYSE | Headquaters | Seattle, WA, United States |
IPO Launch date | 2001-01-02 | President, CEO & Director | Mr. Benito Minicucci |
Sector | Industrials | Website | https://www.alaskaair.com |
Industry | Airlines | Full time employees | 23784 |
Headquaters | Seattle, WA, United States | ||
President, CEO & Director | Mr. Benito Minicucci | ||
Website | https://www.alaskaair.com | ||
Website | https://www.alaskaair.com | ||
Full time employees | 23784 |
Alaska Air Group, Inc., through its subsidiaries, operates airlines. It operates through three segments: Mainline, Regional, and Horizon. The company offers scheduled air transportation services on Boeing jet aircraft for passengers and cargo in the United States, and in parts of Canada, Mexico, Costa Rica, Belize, Guatemala, and the Bahamas; and for passengers across a shorter distance network within the United States, Canada, and Mexico. Alaska Air Group, Inc. was founded in 1932 and is based in Seattle, Washington.
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