NEW YORK (TheStreet) -- Shares of Alaska Air Group (ALK) are up 1.14% to $60.45 in pre-market trade after Barron's endorsed the Seattle-based airline, saying "Alaska Air has a much brighter future than investors may realize." Despite consistent profits, innovation, and sky-high customer satisfaction, shares remain undervalued, the publication reports.
Like many airlines, Alaska Air has handily outperformed the S&P 500 in the past year, but its 63% rise means it has trailed nearly every single one of its peers: Softness in its regional business and worries about Delta Airlines (DAL) pushing into its main Seattle hub have kept some investors at bay, Barron's noted.
Those worries, however, are likely to melt away. Like other carriers, Alaska should benefit from lower oil prices and its focus on the domestic market makes it less vulnerable to a strengthening dollar than international airlines, Barron's said.
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Separately, TheStreet Ratings team rates ALASKA AIR GROUP INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALASKA AIR GROUP INC (ALK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. 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 analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, ALK's share price has jumped by 60.56%, 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 29.8%. 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 -5.49%.
- 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.
- You can view the full analysis from the report here: ALK Ratings Report