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Alaska Air Group, a Zacks Rank #1 (Strong Buy), offers scheduled air transportation services for passengers and cargo across more than 120 cities. Through its mainline operations, Alaska covers the western United States, Canada, and Mexico. The company also operates Horizon Air, which serves nearly 7 million passengers annually under a capacity purchase agreement.
ALK stock is displaying relative strength, breaking out to the upside amid a bullish move that pushed the airline industry to fresh 52-week highs. The price movement is a sign of strength as we head further into the new year. Increasing volume has attracted investor attention as buying pressure accumulates in this top-ranked stock.
Alaska is part of the Zacks Transportation – Airline industry group, which currently ranks in the top 11% out of more than 250 industries. Because this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months, just as it has over the past month:
Image Source: Zacks Investment Research
Also note the favorable metrics for this industry group below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top industries, we can dramatically improve our stock-picking success.
Bullish Airline Initiatives
Alaska Air Group recently laid out its 2025 guidance as well as a strategic, three-year initiative plan that included expanding the city of Seattle to what the company refers to as a “global gateway.”
Beginning in 2025, new services will include nonstop directives to Tokyo and Seoul as part of its combination with Hawaiian Airlines, which was completed in September of last year.
CEO Ben Minicucci stated that last year’s deal with Hawaiian Airlines will “transform our business and solidify our competitive advantage for years to come.” As a result, the carrier reported that it had raised its fourth-quarter adjusted EPS outlook to a range of $0.40-$0.50 (from $0.20-$0.40) due to “stronger revenue performance and lower non-operating expense.”
The airliner strives to deliver $1 billion in incremental profit under its newly-created “Alaska Accelerate” program. Management expects to drive double-digit margins of 11%-13% and achieve EPS of at least $10 by 2027. Alaska is also set to expand its domestic network this spring, in addition to enhancing existing airport lounges and introducing a new loyalty offering.
On a shareholder-friendly note, Alaska’s board of directors approved a new repurchase program back in December, authorizing the company to buy back up to $1 billion in common stock.
Earnings Trends and Future Estimates
Alaska Air Group (ALK - Free Report) has built up an impressive reporting history, surpassing earnings estimates in each of the last four quarters. The company delivered an average surprise of 23.15% over that timeframe.
Back in October, Alaska reported third-quarter earnings of $2.25 per share, a 2.27% surprise over the $2.20/share consensus estimate. Revenues of $3.07 billion also exceeded projections by 2.8%.
Analysts are bullish on the stock and have raised fiscal 2025 earnings estimates by 10.43% in the past 60 days. The Zacks Consensus Estimate now stands at $5.93 per share, reflecting EPS growth of 35.7% this year on 24% revenue growth ($14.66 billion).
Image Source: Zacks Investment Research
Let’s Get Technical
This market leader has seen its stock advance 75% over the past 6 months. Only stocks that are in extremely powerful uptrends are able to experience this type of outperformance. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of higher highs throughout the past year. With both strong fundamental and technical indicators, ALK stock is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Alaska Air Group has recently witnessed positive revisions. As long as this trend remains intact (and ALK continues to deliver earnings beats), the stock will likely continue its bullish run.
Bottom Line
Backed by a leading industry group and history of earnings beats, it’s not difficult to see why ALK stock is a compelling investment. Robust fundamentals combined with an appealing technical trend certainly justify adding shares to the mix.
The company also boasts top marks in our Zacks Value Style Category, indicating that shares are likely to outperform based on favorable valuation metrics.
Recent positive earnings estimate revisions should also serve to create a ‘floor’ in terms of any sudden or unexpected downside moves. If you haven’t already done so, be sure to put ALK on your shortlist.
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Bull of the Day: Alaska Air Group (ALK)
Alaska Air Group, a Zacks Rank #1 (Strong Buy), offers scheduled air transportation services for passengers and cargo across more than 120 cities. Through its mainline operations, Alaska covers the western United States, Canada, and Mexico. The company also operates Horizon Air, which serves nearly 7 million passengers annually under a capacity purchase agreement.
ALK stock is displaying relative strength, breaking out to the upside amid a bullish move that pushed the airline industry to fresh 52-week highs. The price movement is a sign of strength as we head further into the new year. Increasing volume has attracted investor attention as buying pressure accumulates in this top-ranked stock.
Alaska is part of the Zacks Transportation – Airline industry group, which currently ranks in the top 11% out of more than 250 industries. Because this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months, just as it has over the past month:
Image Source: Zacks Investment Research
Also note the favorable metrics for this industry group below:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top industries, we can dramatically improve our stock-picking success.
Bullish Airline Initiatives
Alaska Air Group recently laid out its 2025 guidance as well as a strategic, three-year initiative plan that included expanding the city of Seattle to what the company refers to as a “global gateway.”
Beginning in 2025, new services will include nonstop directives to Tokyo and Seoul as part of its combination with Hawaiian Airlines, which was completed in September of last year.
CEO Ben Minicucci stated that last year’s deal with Hawaiian Airlines will “transform our business and solidify our competitive advantage for years to come.” As a result, the carrier reported that it had raised its fourth-quarter adjusted EPS outlook to a range of $0.40-$0.50 (from $0.20-$0.40) due to “stronger revenue performance and lower non-operating expense.”
The airliner strives to deliver $1 billion in incremental profit under its newly-created “Alaska Accelerate” program. Management expects to drive double-digit margins of 11%-13% and achieve EPS of at least $10 by 2027. Alaska is also set to expand its domestic network this spring, in addition to enhancing existing airport lounges and introducing a new loyalty offering.
On a shareholder-friendly note, Alaska’s board of directors approved a new repurchase program back in December, authorizing the company to buy back up to $1 billion in common stock.
Earnings Trends and Future Estimates
Alaska Air Group (ALK - Free Report) has built up an impressive reporting history, surpassing earnings estimates in each of the last four quarters. The company delivered an average surprise of 23.15% over that timeframe.
Back in October, Alaska reported third-quarter earnings of $2.25 per share, a 2.27% surprise over the $2.20/share consensus estimate. Revenues of $3.07 billion also exceeded projections by 2.8%.
Analysts are bullish on the stock and have raised fiscal 2025 earnings estimates by 10.43% in the past 60 days. The Zacks Consensus Estimate now stands at $5.93 per share, reflecting EPS growth of 35.7% this year on 24% revenue growth ($14.66 billion).
Image Source: Zacks Investment Research
Let’s Get Technical
This market leader has seen its stock advance 75% over the past 6 months. Only stocks that are in extremely powerful uptrends are able to experience this type of outperformance. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of higher highs throughout the past year. With both strong fundamental and technical indicators, ALK stock is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Alaska Air Group has recently witnessed positive revisions. As long as this trend remains intact (and ALK continues to deliver earnings beats), the stock will likely continue its bullish run.
Bottom Line
Backed by a leading industry group and history of earnings beats, it’s not difficult to see why ALK stock is a compelling investment. Robust fundamentals combined with an appealing technical trend certainly justify adding shares to the mix.
The company also boasts top marks in our Zacks Value Style Category, indicating that shares are likely to outperform based on favorable valuation metrics.
Recent positive earnings estimate revisions should also serve to create a ‘floor’ in terms of any sudden or unexpected downside moves. If you haven’t already done so, be sure to put ALK on your shortlist.