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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Alaska Air Group, Inc. (XNYS:ALK) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
ALK
Name:
ALASKA AIR GROUP, INC. (XNYS:ALK)
Sector:
- 1000.00K
Industry:
Airlines
CEO:
Mr. Bradley Tilden
Total Employees:
20,550
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 49.05% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ALASKA AIR GROUP, INC.(ALK) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND AIRLINES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
43.62
One Month Price Target:
$43.97
Six Month Price Target :
$45.73
Likely Price in One Year's Time:
Ticker:
$47.83
Likely Trading Range Today Under (Normal Volatility)
$43.35
Price Upper limit ($) :
$43.89
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$40.39
This week:
$36.39
This month :
$29.16
Other Primary facts
Market Cap:
5.56B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
126.76M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
20.31%
-23.24%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$58.63
$51.80
$28.61
$35.44
Medium risk (<10%) entry points
Buy Call
Sell Call
$49.58
Buy Put:
Sell Put:
$48.12
$37.64
$39.12
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
ALK
Sharpe Ratio:
-0.14%
Comparison:
ALK, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -74.08% lower than the industry
& is -106.20% lower than the market/S&P 500 average
Average Returns/Yield of
ALK
Daily returns:
0.00%
Weekly returns:
0.02%
Monthly returns:
0.07%
Yearly returns:
-3.24%
Comparison of returns:
Average annual returns/yield (last 3 years) is -127.76% below industry average
Classification:
ALK, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.76
Statistical test of Returns:
ALK has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.61%
Weekly Volatility:
8.07%
Monthly Volatility:
16.15%
Yearly Volatility:
55.93%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.59%
Volatility in last five trading days has been -55.85% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-7.41%
Weekly VaR:
-16.57%
Monthly VaR:
-33.14%
How Much Can the price of
ALK
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-29%
Worst case (decline):
>85%
This translates to price declining to:
$30.85
This translates to price declining to:
$6.54
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
ALK is a 133.91% riskier investment compared to the market/S&P 500 & is 100.39% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -14.05% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
ALK
Beta in relation to market/S&P 500--1.44
Expected beta in 1 year's time:
1.015
Expected beta in 3 year's time:
1.435
Unlevered (debt free) Beta:
0.934
Beta in relation to Nasdaq (XNAS):
0.983
Beta in relation to all global stocks::
1.029
Beta Comparison & Analysis
Beta of competitors/peers::
1.368
Beta is 5.08% higher than peers
Average Industry Beta:
1.438
Beta is -0.08% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
19.65%
Sustainable growth rate is 27.63% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.121
Alpha is -25.54% below industry average alpha yield
Alpha is -770% below the market average
Analysis of Cost of Capital of
ALK
Equity cost of capital:
0.130
Equity cost of capital is -0.06% below industry mean WACC
Unlevered (without debt) cost of capital:
8.44%
Before-tax cost of debt:
2.88%
After-tax cost of debt:
2.27%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.27%
WACC is 19.23% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$55.69
Revenue growth rate per share of (3Y):
1.29
Annual revenue growth rate is -4.58% below industry average
EPS:
$3.66
Expected Annual growth rate of EPS (3Y):
-16.29%
Expected future EPS growth rate is -31.77% lower than the Airlines industry
Free cash flow (FCF) per share:
$4.62
Balance sheet equity growth per share: -100.00%
Equity growth rate per share is 42.86% higher than the industry
Debt per share
$27.10
EBITDA per share
$8.95
Valuation Analysis Today of
ALK
P/E Ratio:
28.9
P/E Ratio of Competitors/Peers:
20.95
P/E ratio is 37.94% higher than main peers & is -9.03% lower than the industry
Stock price/value with industry average P/E ratio: $116.29
ALK is -62.49% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $39.05
Present value of the expected future dividends only: $13.27
P/S (Price to Sales ratio):
0.78
Price to sales ratio is -26.23% below the industry mean
P/B (Price to book value ratio):
1.29
Price to free cash flow: 9.44
Price to free cash flow ratio is -52.04% lower than the industry
Net income growth rate (3Y):
9.19%
Net income growth rate is -108.11% lower than the industry average net income growth rate
Dividend Analysis
-
Dividend yeild: 1.66%
Previous Dividend: $0.38
Previous adjusted dividend: $0.38
Previous Dividend: $0.73
Expected next dividend best case: $0.77
Expected next dividend worst case: -$0.02
Average dividend payment (long-term): $0.36
Average dividend increase/decrease (growth rate) % per period: 7.14%
-
-
-
Previous dividend payment date: 03/05/2020
Previous dividend record date: 18/02/2020
Previous dividend declaration date: 28/01/2020
Dividend History:
2020-02-14--$0.38
--$0.00
--$0.00
2019-11-18--$0.35
--$0.00
--$0.00
Dividend growth rate is -111.90% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
94.45%
Net debt to equity ratio:
92.69%
Debt to assets ratio:
24.17%
Net debt to assets ratio:
23.72%
Debt-to-asset ratio is -63.41% below industry average
Ability to repay debt:
Interest coverage ratio:
9.86
Interest coverage ratio is 507.50% more than industry average
Looking forward:
Debt growth rate:
46.24%
Annual debt growth is 601% higher than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.61
Statistical significance of correlation:
ALK has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.536
Stock price is 13.75% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.536
Correlation of price movement with Nasdaq (^IXIC):
0.038
Covariance of price movement with the market:
0.08
Kurtosis
8.923
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.036
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
ALK
Gross Profit Margin Ratio:
151%
Operating Profit Margin Ratio:
9.12%
Operating profit margin is -8332.60% lower than the industry
Net Profit Margin Ratio:
151%
Effective Tax Rate:
42.95%
Effective tax rate is 75.76% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
12.81%
Return on equity (ROE) is -2068.96% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
3.28%
Return on assets (ROA) is 3036.70% higher than the industry
Financial Leverage:
1.3x
Current Ratio:
0.87
Current ratio is -29.05% below industry average
Cash Conversion Cycle (days):
11
Cash conversion cycle is -78.40% below industry average
The remaining useful life of property plant & equipment is: 4.0 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
343.6K
Each employee generates 11% more revenue than industry average revenue per employee
EBITDA generated per employee:
55.2K
Each employee generates 191% more EBITDA than industry average revenue per employee
Profit generated per employee:
22.7K
Each employee generates -604% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
0.0K
Each employee generates -102% less free cash flow than industry average revenue per employee
Assets/Capital per employee
498.1K
Each employee generates -102% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
ALK
MASTEC, INC. (XNYS:MTZ)
ENOVIS CORPORATION (XNYS:ENOV)
ZIM INTEGRATED SHIPPING SERVICES LTD (XNYS:ZIM)
EMCOR GROUP, INC. (XNYS:EME)
IAA, INC. (XNYS:IAA)
DONALDSON COMPANY, INC. (XNYS:DCI)
RITCHIE BROS. AUCTIONEERS INCORPORATED (XNYS:RBA)
ADT INC. (XNYS:ADT)
KBR, INC. (XNYS:KBR)
Current Analyst Ratings
Strong buy�21%
Buy�25%
Hold�13%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
7.06B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
4.50B
2.56B
-
-
198.00M
198.00M
1.76B
1.96B
25.00M
115.00M
297.00M
1.13B
644.00M
466.00M
596.00M
256.00M
466.00M
Statement of Cash Flow
Date:
Period:
-
Differed Income Tax :
-
Stock Based Compensation :
-
Change in Working Capital :
248.00M
Accounts Receivables:
-
Other Working Capital:
- 596000.00K
Other Non-Cash Items:
182.00M
Net Cash Provided by Operating Activities:
287.00M
Investments in PP&E:
- 288000.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
628.00M
2.26B
2.89B
658.00M
78.00M
348.00M
3.97B
7.78B
-
-
-
-
411.00M
10.24B
-
14.21B
299.00M
564.00M
-
1.04B
2.67B
4.57B
3.44B
-
5.34B
-
9.91B
1.00M
4.10B
- 292000.0K
-
March 31, 2022 at 6:00:00 AM
6.46B
3.64B
13.55B
-
4.00B
3.4B
-
327.00M
39.00M
-
-
-
-
- 168000.00K
- 168000.00K
-
158.00M
652.00M
494.00M
287.00M
- 288000.00K
- 1000.00K
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
ALK
2023
2024
2025
2026
2027
$48.07
$74.66
$81.87
$89.77
$98.44