Stock To Watch: Alaska Air Group (ALK) In Perilous Reversal

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Alaska Air Group ( ALK) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Alaska Air Group as such a stock due to the following factors:

  • ALK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $69.9 million.
  • ALK has traded 255,679 shares today.
  • ALK is down 3.2% today.
  • ALK was up 5% yesterday.

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More details on ALK:

Alaska Air Group, Inc., through its subsidiaries, provides passengers and cargo air transportation services in the United States. The company operates through Alaska Mainline and Alaska Regional segments. It serves approximately 100 cities in Alaska, the Lower 48, Hawaii, Canada and Mexico. The stock currently has a dividend yield of 0.9%. ALK has a PE ratio of 14.5. Currently there are 4 analysts that rate Alaska Air Group a buy, 2 analysts rate it a sell, and 5 rate it a hold.

The average volume for Alaska Air Group has been 1.4 million shares per day over the past 30 days. Alaska Air Group has a market cap of $7.5 billion and is part of the services sector and transportation industry. The stock has a beta of 1.08 and a short float of 6.6% with 7.01 days to cover. Shares are up 53.2% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Alaska Air Group as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Compared to its closing price of one year ago, ALK's share price has jumped by 46.01%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ALK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ALK's revenue growth trails the industry average of 30.5%. Since the same quarter one year prior, revenues slightly increased by 7.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 35.02% is the gross profit margin for ALASKA AIR GROUP INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.51% is above that of the industry average.
  • Net operating cash flow has increased to $257.00 million or 11.73% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.12%.
  • The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.86 is somewhat weak and could be cause for future problems.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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