Alaska Air Group (ALK – Free Report) is benefiting from its robust strategic plan, ‘Alaska Accelerate’, to boost its global connectivity, which is commendable. An uptick in air travel demand bodes well for the company. Due to these tailwinds, ALK shares have performed impressively on the bourse. If you have not taken advantage of its share price appreciation yet, it’s time to do so.
Let’s delve deeper.
ALK’s Northward Earnings Estimate Revision: In the past 60 days, the Zacks Consensus Estimate for 2025 earnings has been revised upward by 19%. Such favorable estimate revisions indicate brokers’ confidence in the stock.
Robust Price Performance: A look at the company’s price trend reveals that its shares have risen 68.9% over the past year, surpassing the industry’s 31% growth.
Image Source: Zacks Investment Research
Positive Earnings Surprise History: Alaska Air Group has an encouraging earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 23.2%.
Solid Zacks Rank: ALK currently sports a Zacks Rank #1 (Strong Buy).
Bullish Industry Rank: The industry to which ALK belongs currently has a Zacks Industry Rank of 19 (out of 248). Such a favorable rank places it in the top 8% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.
Growth Factors: Alaska Airlines’ proactive strategic plan, ‘Alaska Accelerate’, to deliver $1 billion in incremental profit following its combination with Hawaiian Airlines is praiseworthy. The plan focuses on four key goals: expanding global connectivity with a Seattle gateway and long-haul flights, becoming Hawaii’s trusted airline with enhanced connectivity and a dedicated loyalty program, delivering a remarkable travel experience with premium services and offerings, and diversifying revenue streams through cargo growth, innovation and technology investments. This comprehensive approach positions ALK for sustainable growth and improved customer experience.
The uptick in air travel demand is boosting ALK’s top line, with consolidated traffic (measured in revenue passenger miles) rising 8% to 16.97 billion in the third quarter of 2024. To meet this surge in demand, capacity (measured in available seat miles) grew by 6.8% to 19.84 billion. As traffic growth outpaced the expansion in capacity, the consolidated load factor (percentage of seat occupancy) increased by 0.9 percentage points, reaching 85.5% compared to our estimate of 83.3%.
Alaska Airlines’ efforts to expand its network are commendable. To this end, the company is launching five new nonstop routes, including Las Vegas to San Diego, Santa Rosa/Sonoma County and Reno, as well as Los Angeles to Pasco, WA. The airline is also resuming service between Portland and Atlanta and adding two daily flights from Los Angeles, including the Los Angeles-Reno route and a new nonstop from Pasco to LAX.
Other Stocks to Consider
Investors interested in the Zacks Transportation sector may also consider American Airlines (AAL – Free Report) and United Airlines (UAL – Free Report) .
American Airlines currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
AAL has an expected earnings growth rate of 16% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average beat of 124.4%. Shares of AAL have risen 16.4% in the past year.
United Airlines currently carries a Zacks Rank #2 (Buy). UAL has an expected earnings growth rate of 1.3% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 26.9%. Shares of UAL have climbed 122.9% in the past year.
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