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Alaska Air Group Shows Mixed Signals Ahead of Earnings

In a recent report, Alaska Air Group's stock performance reflects a drop, yet it has seen significant gains over the past month. Analysts expect a decline in earnings per share despite a slight rise in projected quarterly revenue, highlighting mixed investor sentiment as the airline approaches its earnings report.

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AI Rating:   5

Alaska Air Group (ALK) closed at $41.34, experiencing a -0.72% change from the previous day. This decline, near the time of its earnings report, is noteworthy, as it shows that despite a recent monthly gain of 19.72%, investors are cautious.

The upcoming earnings report is crucial as ALK is projected to report an earnings per share (EPS) of $1.64, representing a year-over-year decline of 10.38%. Furthermore, while the revenue is expected to be $2.94 billion, reflecting a 3.6% increase from last year, the sentiment surrounding this EPS drop could negatively impact investor confidence.

For the full year, the estimates suggest earnings of $4.20 per share and a revenue of $10.73 billion, which are predicted to decline by 7.28% and show a slight increase of 2.92% respectively. The projected EPS decline alongside modest revenue growth indicates challenges in profit generation for Alaska Air Group.

The Zacks Rank indicates the company's rating is currently a #3 (Hold), reflecting a neutral sentiment. This rating arises from a 3.13% rise in the consensus EPS estimate over the past month, which shows some analyst optimism despite the projected decline.

In terms of valuation, Alaska Air Group’s Forward P/E ratio stands at 9.91, slightly lower than the industry average of 9.93. Additionally, the PEG ratio at 0.63 implies the stock could be undervalued relative to its growth expectations compared to the industry mean of 1.04.

The airline industry as a whole is currently struggling; with a Zacks Industry Rank of 211, the Transportation - Airline sector is positioned in the bottom 17% of over 250+ industries. The underperformance of the industry can potentially put more pressure on Alaska Air Group's stock prices.

Stocks:  ALK