- Alaska Air Group (ALK) is witnessing an increase in air-travel demand, particularly on the leisure front, making the ALK stock an attractive investment opportunity.
- The Zacks Consensus Estimate for current-quarter and current-year earnings has been revised upwards by 8.3% and 13.1% respectively over the past 60 days, reflecting brokers’ confidence in the stock.
- Driven by the positive air-travel demand scenario, shares of ALK have gained 21.8% over the past three months, outperforming its industry’s growth of 13.5% in the same timeframe.
Alaska Air Group (ALK) is gaining traction from an uptick in air-travel demand, making it an interesting investment opportunity. With upward revisions in earnings estimates and impressive price performance, the stock is set for growth.
Northward Earnings Estimates
The Zacks Consensus Estimate for ALK’s current-quarter and current-year earnings has been revised 8.3% and 13.1% upward, over the past 60 days, respectively. This favorable estimate revision reflects brokers’ confidence in the stock and serves as a key indicator in determining the price of a stock.
Upbeat Air-Travel Demand
Alaska Air is witnessing a steady recovery in air-travel demand. As a result of this upbeat demand and favorable pricing, Alaska Air’s top line increased by 8% year over year in 2023. The company anticipates second-quarter 2024 earnings per share to be between $2.20 and $2.40. To meet the increasing demand, ALK is boosting capacity and expects available seat miles (a measure of capacity) to increase in the range of 5-7% in the second quarter of 2024 from second-quarter 2023 actuals.
Impressive Price Performance
Driven by the positive air-travel demand scenario, shares of ALK have gained 21.8% over the past three months, outperforming its industry’s growth of 13.5% in the same timeframe. The industry, to which ALK belongs, currently has a Zacks Industry Rank of 95 (of 250 plus groups), placing the company in the top 38% of the Zacks industries.
Other Stocks to Consider
Other top-ranked stocks in the Zacks Transportation sector include Air Lease (AL) and Wabtec Corporation (WAB), each currently sporting a Zacks Rank #1 (Strong Buy). Air Lease has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in each of the last four quarters. Wabtec Corporation’s solid performance in the Freight and Transit segments is boosting its top line.
Conclusion
With an uptick in air-travel demand, upward revision in earnings estimates, and impressive price performance, Alaska Air Group (ALK) presents an attractive investment opportunity. The company’s strategic measures to boost capacity to meet increasing demand further strengthens its growth prospects.
