Yahoo Finance Alaska Air Group Stock on a Losing Streak after Its 1Q16 Results
Why Alaska Air Group's Upbeat 1Q16 Results Left Investors Flat
ALK’s 1Q16 results
Alaska Air Group (ALK) announced its 1Q16 earnings on April 21, 2016. ALK reported revenues of ~$1.4 billion, which was ~1% above analysts’ revenue estimate of ~$1.3 billion for the quarter. ALK’s earnings per share of $1.46 also managed to beat analyst estimates by 2%.
Stock declines
Despite posting upbeat 1Q16 results, Alaska Air Group’s stock declined on result day. ALK stock was down by 2.7% at the end of the day. This pessimism rubbed onto other airlines. All major airlines, with the exception of Southwest Airlines (LUV), which also declared its 1Q16 earnings, declined for the day.
Alaska Air recently acquired Virgin America and paid quite a hefty premium for it. The acquisition has weighed on the stock since the announcement. The deal still requires approval from Virgin America (VA) shareholders and the US Department of Justice.
Year-to-date performance
After gaining about 36% during 2015, Alaska Air Group (ALK) hasn’t had a great start to 2016. Year-to-date until April 21, 2016, the stock has lost almost 2.5%.
This is in marked contrast to three of its regional peers. Spirit Airlines (SAVE) saw the highest gain of 21%, followed by LUV’s gain of 12% and Allegiant Travel’s (ALGT) gain of 8%. JetBlue (JBLU) was the only other regional airline, losing ~6% YTD.
As air travel relies on discretionary spending, we can compare the airline industry’s performance to the consumer discretionary sector. The Consumer Discretionary SPDR ETF (XLY) rose by 0.9% during the same period. The broader market, which is tracked by the SPDR S&P 500 ETF (SPY), also gained 1.5% YTD.
Series overview
In this series, we will analyze Alaska Air Group’s (ALK) performance for 1Q16. We will also discuss the factors that are expected to drive ALK’s growth in 2016. Finally, we will wrap up the series with a discussion of the airline company’s valuation multiple.
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