Contrasting SkyWest (SKYW) and Alaska Air Group (ALK)
SkyWest (NASDAQ: SKYW) and Alaska Air Group (NYSE:ALK) are both transportation companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, institutional ownership, valuation, dividends and profitabiliy.
Volatility and Risk
SkyWest has a beta of 1.62, suggesting that its share price is 62% more volatile than the S&P 500. Comparatively, Alaska Air Group has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500.
Institutional & Insider Ownership
91.2% of SkyWest shares are owned by institutional investors. Comparatively, 92.0% of Alaska Air Group shares are owned by institutional investors. 3.5% of SkyWest shares are owned by insiders. Comparatively, 0.6% of Alaska Air Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This table compares SkyWest and Alaska Air Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alaska Air Group||11.51%||30.01%||9.53%|
Valuation & Earnings
This table compares SkyWest and Alaska Air Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|SkyWest||$3.12 billion||0.62||$594.73 million||($3.01)||-12.44|
|Alaska Air Group||$6.33 billion||1.74||$1.75 billion||$5.88||15.12|
Alaska Air Group has higher revenue and earnings than SkyWest. SkyWest is trading at a lower price-to-earnings ratio than Alaska Air Group, indicating that it is currently the more affordable of the two stocks.
SkyWest pays an annual dividend of $0.32 per share and has a dividend yield of 0.9%. Alaska Air Group pays an annual dividend of $1.20 per share and has a dividend yield of 1.3%. SkyWest pays out -10.6% of its earnings in the form of a dividend. Alaska Air Group pays out 20.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Alaska Air Group has raised its dividend for 3 consecutive years. Alaska Air Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of recent ratings and price targets for SkyWest and Alaska Air Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alaska Air Group||0||2||9||0||2.82|
SkyWest presently has a consensus price target of $40.50, suggesting a potential upside of 8.14%. Alaska Air Group has a consensus price target of $101.50, suggesting a potential upside of 14.16%. Given Alaska Air Group’s stronger consensus rating and higher probable upside, analysts plainly believe Alaska Air Group is more favorable than SkyWest.
Alaska Air Group beats SkyWest on 13 of the 18 factors compared between the two stocks.
SkyWest Company Profile
SkyWest, Inc., through its subsidiaries, SkyWest Airlines, Inc. (SkyWest Airlines) and ExpressJet Airlines, Inc. (ExpressJet), operates regional airline operations in the United States. The Company’s segments include SkyWest Airlines, ExpressJet and SkyWest Leasing. The SkyWest Airlines segment provides regional jet service to airports primarily located in the Midwestern and Western United States, as well as Mexico and Canada. The ExpressJet segment provides regional jet service to airports primarily located in the Eastern and Midwestern United States, as well as Mexico, Canada and the Caribbean. The SkyWest Leasing segment includes its E175 aircraft ownership business. As of December 31, 2016, the Company offered scheduled passenger service with approximately 3,160 daily departures to destinations in the United States, Canada, Mexico and the Caribbean. The Company’s flights are operated as Delta Connection, United Express, American Eagle or Alaska Airlines.
Alaska Air Group Company Profile
Alaska Air Group, Inc. is the holding company of Alaska Airlines (Alaska), Virgin America Inc., Horizon Air (Horizon) and other business units. The Company operates through three segments: Mainline, Regional and Horizon. Its Mainline segment includes Alaska’s and Virgin America’s scheduled air transportation for passengers and cargo throughout the United States, and in parts of Canada, Mexico, Costa Rica and Cuba. Its Regional segment includes Horizon’s and other third-party carriers’ scheduled air transportation for passengers across a shorter distance network within the United States under capacity purchased arrangements (CPAs). Its Horizon segment includes the capacity sold to Alaska under CPA. Alaska and Virgin America operate fleets of narrowbody passenger jets. As of December 31, 2016, it maintained two frequent flyer plans: the Alaska Airlines Mileage Plan and the Virgin America Elevate.
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