ALK Stock Up 12.1% on Q4 Earnings: Time to Buy?

Core Viewpoint - Alaska Air Group (ALK) reported strong fourth-quarter 2024 results, exceeding expectations and benefiting from increased air travel demand and the acquisition of Hawaiian Holdings [1][3][4]. Financial Performance - ALK's Q4 2024 earnings per share reached 97 cents, surpassing the Zacks Consensus Estimate of 47 cents, marking a year-over-year increase of over 100% [3]. - The company experienced a 38.4% year-over-year revenue growth, driven by sustained leisure demand and a rise in corporate travel [4]. - Corporate revenues increased by 8% during the quarter, with First and Premium Class revenues up 10% and 11% year-over-year, respectively [4]. Guidance and Future Outlook - ALK's guidance for Q1 2025 indicates expected unit revenue growth in high single digits and capacity growth of 2.5-3.5% [5]. - The company anticipates earnings per share of over $5.75 in 2025, supported by a capacity growth of 2-3$248 million in Q4 2024 and $312 million for the full year, reducing the outstanding share count to 123 million [9][10]. - The company has initiated a new$1 billion share repurchase program, aiming to complete it within four years [10]. Valuation - ALK stock is currently trading at a forward price-to-sales (P/S) ratio of 0.65, which is below industry averages and competitor Delta Air Lines (DAL) at 0.69 [11]. - This attractive valuation, combined with strong earnings growth, positions ALK as a compelling option for value investors [12]. Investment Recommendation - Despite challenges from high labor costs, ALK is well-positioned for growth due to strong air travel demand and shareholder-friendly initiatives [13]. - The Wall Street average target price for ALK stock is $85.57, suggesting an upside of over 13% from current levels [13]. - ALK is considered a strong buy, reflecting a mix of value, growth potential, and resilience [14].