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Alaska Air (ALK)
NYSE:ALK
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Alaska Air
(NYSE:ALK)
69Neutral
Positive Factors
Earnings Performance
Alaska Air reported strong EPS, significantly beating its updated guidance, driven by lower unit costs and an uptick in corporate travel.
Mergers and Synergies
The HA merger looks to be a situation where 1 + 1 = 3 and the two franchises are fitting hand in glove.
Stock Repurchase
ALK has repurchased nearly $150M in stock, indicating a compelling opportunity in the current environment and ability to generate solid profitability.
Negative Factors
Earnings Outlook
ALK withdrew its EPS outlook of over $5.75 while guiding EPS below the Street, indicative of the tough domestic demand environment.
Revenue Decline
ALK's unit revenue outlook is a larger deceleration than expected and modestly lower than investor expectations.
Alaska Air (ALK) vs. S&P 500 (SPY)
Market Cap
$5.77B
Dividend YieldN/A
Average Volume (3M)3.80M
Price to Earnings (P/E)17.7
Beta (1Y)0.81
Revenue Growth20.82%
EPS Growth47.79%
CountryUS
Employees29,773
SectorIndustrials
Sector Strength80
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)-0.77
Shares Outstanding122,751,785
10 Day Avg. Volume4,655,558
30 Day Avg. Volume3,799,397
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.71
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit4.17
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$67.36Price Target Upside27.65% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering11
Alaska Air Business Overview & Revenue Model
Company DescriptionAlaska Air Group, Inc. (ALK) is a prominent airline holding company headquartered in SeaTac, Washington. It operates through its subsidiaries, Alaska Airlines and Horizon Air, serving a comprehensive network that spans over 115 destinations across the United States, Mexico, Canada, and Costa Rica. The company is renowned for its focus on customer service, operational efficiency, and a robust route structure, offering a range of services from basic economy to first-class seating. Alaska Air Group is committed to sustainable practices and innovation in its operations, enhancing the overall travel experience for its customers.
How the Company Makes MoneyAlaska Air Group primarily generates revenue through passenger ticket sales, which constitute the largest portion of its earnings. The company offers various fare classes and ancillary services such as baggage fees, seat selection, and in-flight purchases, contributing to additional revenue streams. Cargo services also play a role in the company's revenue model, with Alaska Air providing freight and mail transportation. The company benefits from strategic partnerships and codeshare agreements with other airlines, expanding its network reach and customer base. Additionally, Alaska Air Group capitalizes on its loyalty program, Mileage Plan, which drives customer retention and revenue through partnerships with hotels, car rental agencies, and other travel-related services.
Alaska Air Financial Statement Overview
Summary
Alaska Air demonstrates a robust financial trajectory with strong revenue growth and improving profit margins. The balance sheet shows a moderate debt-to-equity ratio and commendable ROE, though there's room for enhancing financial stability by strengthening the equity base. Cash flows are positive, with effective capital expenditure management, yet potential volatility in future cash reserves requires careful monitoring.Income Statement
Alaska Air has demonstrated a strong revenue trajectory with a consistent increase in total revenue over the years, highlighted by a significant TTM growth. The gross profit margin is robust, indicating effective cost management, while the net profit margin shows improvement, reflecting enhanced profitability. However, the EBIT margin could benefit from further enhancement to solidify operational efficiency.75
Positive
Balance Sheet
The balance sheet reflects a moderate debt-to-equity ratio, indicating a balanced approach to leveraging. The return on equity (ROE) is commendable, showcasing effective use of equity capital to generate profits. Yet, the equity ratio suggests room for improvement in strengthening the equity base relative to total assets, which would enhance financial stability.68
Positive
Cash Flow
Cash flow analysis reveals a positive trajectory in operating cash flow, underscoring strong operational cash generation capabilities. The free cash flow to net income ratio is positive, signaling effective capital expenditure management. However, fluctuations in free cash flow growth indicate potential volatility in future cash reserves, warranting careful monitoring.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 11.73B | 10.43B | 9.65B | 6.18B | 3.57B | Gross Profit |
| 2.36B | 2.46B | 1.66B | 1.35B | -414.00M | EBIT |
| 570.00M | 394.00M | 338.00M | 341.00M | -1.75B | EBITDA |
| 1.27B | 1.27B | 1.20B | 137.00M | -1.33B | Net Income Common Stockholders |
| 395.00M | 235.00M | 58.00M | 478.00M | -1.31B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.48B | 1.80B | 2.42B | 3.12B | 3.35B | Total Assets |
| 19.77B | 15.83B | 14.28B | 13.95B | 14.05B | Total Debt |
| 6.39B | 3.82B | 3.88B | 4.09B | 5.05B | Net Debt |
| 5.19B | 3.54B | 3.54B | 3.62B | 3.68B | Total Liabilities |
| 15.40B | 11.72B | 10.46B | 10.15B | 11.04B | Stockholders Equity |
| 4.37B | 4.11B | 3.82B | 3.80B | 3.00B |
| Cash Flow | Free Cash Flow | |||
| 183.00M | -444.00M | -253.00M | 738.00M | -440.00M | Operating Cash Flow |
| 1.46B | 1.05B | 1.42B | 1.03B | -234.00M | Investing Cash Flow |
| -634.00M | -964.00M | -1.22B | -1.01B | -593.00M | Financing Cash Flow |
| 119.00M | -147.00M | -325.00M | -914.00M | 1.98B |
Alaska Air Technical Analysis
Positive
52.77
Price Trends
51.13
Positive
60.22
Negative
51.95
Positive
Market Momentum
-0.25
Negative
61.47
Neutral
92.58
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALK, the sentiment is Positive. The current price of 52.77 is above the 20-day moving average (MA) of 45.65, above the 50-day MA of 51.13, and above the 200-day MA of 51.95, indicating a bullish trend. The MACD of -0.25 indicates Negative momentum. The RSI at 61.47 is Neutral, neither overbought nor oversold. The STOCH value of 92.58 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALK.
Alaska Air Risk Analysis
Alaska Air disclosed 28 risk factors in its most recent earnings report. Alaska Air reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Alaska Air Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $29.26B | 8.07 | 27.52% | 1.21% | 4.91% | -27.21% | |
76 Outperform | $24.01B | 6.70 | 33.57% | ― | 5.31% | 35.95% | |
69 Neutral | $5.77B | 17.68 | 8.90% | ― | 20.82% | 47.79% | |
64 Neutral | $4.24B | 11.64 | 5.23% | 249.83% | 4.07% | -10.54% | |
59 Neutral | $17.00B | 35.72 | 5.63% | 2.38% | 3.26% | 27.77% | |
58 Neutral | $6.88B | 12.04 | -21.27% | ― | 1.92% | 36.07% | |
43 Neutral | $1.56B | ― | -11.30% | ― | -3.02% | 66.90% |
* Industrials Sector Average
Performance Comparison
ALK
Alaska Air
52.77
8.91
20.31%
DAL
Delta Air Lines
48.54
-3.64
-6.98%
JBLU
JetBlue Airways
4.79
-0.96
-16.70%
LUV
Southwest Airlines
31.07
4.43
16.63%
UAL
United Airlines Holdings
79.41
26.78
50.88%
AAL
American Airlines
11.03
-3.45
-23.83%
Alaska Air Earnings Call Summary
Earnings Call Date:Apr 23, 2025
(Q1-2025)
| % Change Since: 14.44%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Neutral
The call highlighted strong performance in premium and loyalty segments, successful integration of Hawaiian assets, and an increase in cargo revenue. However, it also noted significant financial losses and challenges in the macroeconomic environment affecting demand and revenue. Despite these issues, the company remains optimistic about its future growth strategies.Q1-2025 Updates
Positive Updates
Strong Premium Revenue Performance
Premium revenues grew 10% and represent approximately 34% of total revenues. The company is on track to increase premium seat exposure to 29% by next summer.
Hawaiian Integration Success
Integration synergies are slightly ahead of plan. Hawaiian assets delivered a seven-point margin improvement, with a double-digit margin improvement from Hawaiian assets year over year.
Growth in Loyalty Programs
Loyalty programs are performing strongly, with Hukai by Hawaiian memberships up 90% since year-end and Hawaiian card acquisitions more than doubled year over year.
Cargo Revenue Increase
Cargo operations are ramping to full capacity, with cargo revenue up 36% year over year.
Share Repurchase Acceleration
The current environment has provided a unique opportunity to accelerate the share repurchase program, with $149 million repurchased year to date.
Negative Updates
First Quarter GAAP Net Loss
Reported a first-quarter GAAP net loss of $166 million. Excluding special items, reported an adjusted net loss of $95 million.
Challenging Macroeconomic Environment
The macroeconomic environment remains challenging, with a six-point revenue impact from the demand backdrop in Q2.
Uncertain Demand Environment
Despite stabilization, the demand environment is challenging to predict, with overall bookings up only low single digits.
Company Guidance
In the Alaska Air Group's 2025 first-quarter earnings call, the company reported a GAAP net loss of $166 million and an adjusted net loss of $95 million, excluding special items and fuel hedge adjustments. Despite a challenging start to the year, the company remains confident in its Alaska Accelerate strategy, with expectations of solid profitability in 2025. The call highlighted the company's strong balance sheet, diversified revenue, and a cost advantage of 15% over competitors. Alaska Air Group anticipates achieving $10 earnings per share by 2027, driven by synergies and commercial initiatives. The company plans a $1 billion share buyback over four years, with acceleration in the current environment, and aims to unlock $1 billion in incremental profit. Integration synergies are slightly ahead of plan, with Hawaiian assets performing well, evidenced by a seven-point margin improvement year over year. Total revenues for Q1 reached $3.1 billion, a 9% increase from the previous year, with unit revenues up 5%. The company also noted a strong demand for its Hawaii operations and premium offerings, with premium revenues growing by 10%. Moving forward, Alaska Air Group expects 2-3% capacity growth in Q2, driven by Hawaiian Airlines assets, and remains focused on long-term value creation and expanding its market presence.Alaska Air Corporate Events
Business Operations and StrategyFinancial Disclosures
Alaska Air Reports Q1 2025 Financial Results
Positive
Apr 23, 2025
Alaska Air Group reported its first quarter 2025 financial results, highlighting a 3.9% increase in capacity and a 9% rise in total revenue year-over-year. Despite facing economic uncertainties and softening demand, the company achieved a 7-point improvement in adjusted pretax margin compared to the previous year. The integration with Hawaiian Airlines has shown positive initial results, contributing to improved asset utilization and connectivity. The company also ratified agreements with flight attendants and expanded its fleet, aiming to strengthen its market position and operational efficiency.
Spark’s Take on ALK Stock
According to Spark, TipRanks’ AI Analyst, ALK is a Neutral.
Alaska Air’s overall score reflects strong financial performance and positive strategic initiatives, balanced by technical weakness and moderate valuation. The earnings call highlights record revenue and strategic growth plans, while technical indicators suggest current bearish trends.
To see Spark’s full report on ALK stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.