Analyzing Alaska Air Group (ALK) & Spirit Airlines (SAVE)
Alaska Air Group (NYSE: ALK) and Spirit Airlines (NASDAQ:SAVE) are both mid-cap transportation companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitabiliy, analyst recommendations, valuation and dividends.
This is a breakdown of recent ratings and recommmendations for Alaska Air Group and Spirit Airlines, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alaska Air Group||0||2||8||0||2.80|
Alaska Air Group currently has a consensus price target of $103.78, suggesting a potential upside of 20.67%. Spirit Airlines has a consensus price target of $54.80, suggesting a potential upside of 42.71%. Given Spirit Airlines’ higher possible upside, analysts clearly believe Spirit Airlines is more favorable than Alaska Air Group.
This table compares Alaska Air Group and Spirit Airlines’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alaska Air Group||11.02%||30.04%||9.14%|
Alaska Air Group pays an annual dividend of $1.20 per share and has a dividend yield of 1.4%. Spirit Airlines does not pay a dividend. Alaska Air Group pays out 19.5% of its earnings in the form of a dividend. Alaska Air Group has raised its dividend for 3 consecutive years.
Risk and Volatility
Alaska Air Group has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, Spirit Airlines has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500.
Valuation and Earnings
This table compares Alaska Air Group and Spirit Airlines’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Alaska Air Group||$6.94 billion||1.53||$1.84 billion||$6.16||13.96|
|Spirit Airlines||$2.49 billion||1.07||$509.32 million||$3.45||11.13|
Alaska Air Group has higher revenue and earnings than Spirit Airlines. Spirit Airlines 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.
Insider & Institutional Ownership
93.4% of Alaska Air Group shares are owned by institutional investors. 0.6% of Alaska Air Group shares are owned by insiders. Comparatively, 0.3% of Spirit Airlines shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Alaska Air Group beats Spirit Airlines on 14 of the 17 factors compared between the two stocks.
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.
Spirit Airlines Company Profile
Spirit Airlines, Inc. is an airline company. The Company provides air transportation for passengers. As of December 31, 2016, its all-Airbus Fit Fleet operated over 420 daily flights to 59 destinations in the United States, Caribbean and Latin America. As of December 31, 2016, it had a fleet of 95 Airbus single-aisle aircraft, which are referred to as A320 family aircraft and include the A319, A320 and A321 models, which have common design and equipment but differ most notably in fuselage length, service range and seat capacity. As of December 31, 2016, its fleet consisted of 29 A319s, 45 A320ceos, five A320neos and 16 A321ceos. Its Bare Fares offerings are unbundled base fares that remove components included in the price of an airline ticket. It also offers Frill Control, which allows customers to pay only for the options they choose, such as bags, advance seat assignments and refreshments. As of December 31, 2016, its route network included 200 markets served by 59 airports.
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