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

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%

Risk & Volatility

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

Dividends

Alaska Air Group pays an annual dividend of $1.20 per share and has a dividend yield of 1.7%. 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. Hawaiian has raised its dividend for 3 consecutive years.

Institutional and Insider Ownership

88.7% of Alaska Air Group shares are owned by institutional investors. Comparatively, 93.9% of Hawaiian shares are owned by institutional investors. 0.6% of Alaska Air Group shares are owned by company insiders. Comparatively, 2.3% of Hawaiian shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

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 1.45 $814.00 million $6.23 11.19
Hawaiian $2.45 billion 0.86 $235.43 million $3.76 10.68

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 current 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 presently has a consensus target price of $87.36, suggesting a potential upside of 25.31%. Hawaiian has a consensus target price of $46.36, suggesting a potential upside of 15.48%. Given Alaska Air Group’s stronger consensus rating and higher possible upside, analysts plainly believe Alaska Air Group is more favorable than Hawaiian.

Summary

Alaska Air Group beats Hawaiian on 11 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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