Alaska Air Group Earnings Preview

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Investors are on the edge of their collective seats, hoping that Alaska Air Group (NYS: ALK) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings on Thursday, Jan. 26. Alaska Air Group, through its subsidiaries, provides passenger air, freight, and mail services mainly to and within the state of Alaska and on the West Coast.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back Alaska Air Group as a buy. But with 53.8% of analysts rating it a buy, Alaska Air Group is still below the mean analyst rating of its nearest 10 competitors, which average 62.7% buys. Analysts like Alaska Air Group better than competitor JetBlue Airways overall. Five out of 13 analysts rate JetBlue Airways a buy compared to seven of 13 for Alaska Air Group. While analysts still rate the stock a moderate buy, they are a little more optimistic about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $1.06 billion in revenue this quarter. That would represent a rise of 10.6% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $1.18 per share. Estimates range from $1.00 to $1.47.

What our community says:
The majority of CAPS All-Stars see Alaska Air Group as a good bet, with 61.4% awarding it an "outperform" rating. The majority of Fools are in agreement with the All-Stars as 62.1% give it an "outperform" rating. Fools are keen on Alaska Air Group and haven't been shy with their opinions lately, logging 114 posts in the past 30 days. Alaska Air Group's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:
Alaska Air Group's profit has risen year over year by an average of more than fourfold over the past five quarters. The company's gross margin shrank by 12.3 percentage points in the last quarter. Revenue rose 12.2% while cost of sales rose 43.1% to $681.1 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q3

Q2

Q1

Q4

Gross Margin

43.2%

38.4%

51.8%

50.8%

Operating Margin

12.0%

5.2%

13.9%

12.4%

Net Margin

6.5%

2.6%

7.7%

6.8%

For all our Alaska Air Group-specific analysis, including earnings and beyond, add Alaska Air Group to My Watchlist.

At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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