Alaska Air Group (NYSE: ALK) and Hawaiian (NASDAQ:HA) are both mid-cap transportation companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Valuation & Earnings

This table compares Alaska Air Group and Hawaiian’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alaska Air Group $5.93 billion 1.41 $814.00 million $6.23 10.93
Hawaiian $2.45 billion 0.85 $235.43 million $3.76 10.60

Alaska Air Group has higher revenue and earnings than Hawaiian. Hawaiian 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Alaska Air Group and Hawaiian, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alaska Air Group 0 1 8 1 3.00
Hawaiian 2 5 5 0 2.25

Alaska Air Group currently has a consensus price target of $87.36, suggesting a potential upside of 28.29%. Hawaiian has a consensus price target of $46.36, suggesting a potential upside of 16.35%. Given Alaska Air Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe Alaska Air Group is more favorable than Hawaiian.

Dividends

Alaska Air Group pays an annual dividend of $1.20 per share and has a dividend yield of 1.8%. Hawaiian pays an annual dividend of $0.48 per share and has a dividend yield of 1.2%. Alaska Air Group pays out 19.3% of its earnings in the form of a dividend. Hawaiian pays out 12.8% 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 increased 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.

Institutional & Insider Ownership

88.5% of Alaska Air Group shares are held by institutional investors. Comparatively, 93.9% of Hawaiian shares are held by institutional investors. 0.6% of Alaska Air Group shares are held by company insiders. Comparatively, 2.3% of Hawaiian shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Alaska Air Group has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Hawaiian has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500.

Profitability

This table compares Alaska Air Group and Hawaiian’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alaska Air Group 10.34% 28.74% 8.75%
Hawaiian 7.67% 41.49% 11.08%

Summary

Alaska Air Group beats Hawaiian on 12 of the 18 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.

Hawaiian Company Profile

Hawaiian Holdings, Inc. is a holding company. The Company is engaged in the scheduled air transportation of passengers and cargo amongst the Hawaiian Islands (the Neighbor Island routes), between the Hawaiian Islands and certain cities in the United States (the North America routes), and between the Hawaiian Islands and the South Pacific, Australia, New Zealand and Asia (the International routes), collectively referred to as its Scheduled Operations. It offers non-stop service to Hawai’i from United States gateway cities. As of December 31, 2016, it also provided approximately 160 daily flights between the Hawaiian Islands. The Company operates various charter flights. As of December 31, 2016, the Company’s fleet consisted of 20 Boeing 717-200 aircraft for the Neighbor Island routes, eight Boeing 767-300 aircraft, and 23 Airbus A330-200 aircraft for the North America, International, and charter routes.

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