Since Sept. 24, when shares opened down 13% year to date, they have gained about 9%. The gain generally followed the Sept. 26 announcement that the carrier will buy back $250 million worth of its stock, equivalent to about 10% of its market capitalization, with completion expected by Dec. 31, 2014.
Alaska shares opened the year at $38.21, adjusted for a split. In trading Thursday, shares were down 24 cents to $36.33. A year spent trailing other airlines' shares has been disappointment for Alaska; in 2011 its shares led the industry with a 30% gain."Alaska is a company that has focused on having a high return on capital for years and has achieved that for years," said aviation consultant Robert Mann. "This (order) tells me they think they can make even more money with further investment in the fleet." News of Thursday's order followed Monday's announcement that Alaska will enter into an expanded codeshare deal with Delta (DAL), under which the carriers will adjust connecting flight schedules at SeaTac Airport and will offer codeshares to more than 50 Alaska markets and more than 60 Delta markets. "It's a case of Delta giving a formal tip of the hat to the guys who make the international operations work" by providing feed, Mann said. Analysts have generally been recommending Alaska despite its disappointing performance. On Tuesday, Dahlman Rose analyst Helane Becker reiterated a buy rating and a $45 price target and raised her third-quarter estimate to reflect better-than-expected non-fuel unit costs in the carrier's guidance. Becker now estimates third-quarter earnings of $2.11 a share, up from $2. Analysts surveyed by Thomson Reuters have a consensus estimate of $2.04 a share. Becker's full-year estimate is $4.90. Consensus is $4.73. Becker said the expanded codeshare with Delta is expected to benefit both carriers. Also Tuesday, Maxim Group analyst Ray Neidl wrote in a note that "in an uncertain economy, we still favor the so-called niche carriers" including Alaska and others. "All have good cost structures, operational flexibility and specific niche markets that they are profitably growing," Neidl wrote.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV