On October 22, 2015, Alaska Air Group (ALK) reported its 3Q15 results. The company reported a 4.1% year-over-year growth in revenue to $1.52 billion, which was in line with analyst estimates. However, ALK’s earnings per share of $2.16 easily beat analyst estimates of $2.10 by ~3%.
Alaska Air Group’s stock has risen by ~6% since October 22, 2015. The stock experienced a robust September when its stock touched new highs, but the stock fell sharply in October. After the release of its 3Q15 results, its shares have bounced back to its September highs.
Alaska Air Group’s stock has generated about 33% stock returns during 2015, bettering most of its competitors in the industry and beating the flat market returns by a huge margin.
As of October 22, 2015, year-to-date (or YTD), Alaska’s low-cost peer JetBlue Airways (JBLU) was the only airline stock to have performed better than Alaska Air Group. JetBlue’s stock rose by 50% YTD. The rest of the airline companies have seen slightly positive or negative returns for the year.
The airline industry, as measured by the Dow Jones US Airlines Index (DJUSAR), has fallen by about 2% for the year. The overall transportation industry, which includes the airline industry, has had an even worse year. The transportation industry, which is tracked by the iShares Transportation Average ETF (IYT), is down ~10% for the year. The overall market (SPY) remained relatively flatter, with -0.25% returns to date in 2015.
In this 3Q15 post-earnings series, we’ll discuss some of the key developments that took place during the quarter. We’ll look at some of the key operating metrics and will discuss the airline’s performance in key markets. Finally, we’ll wrap up the series by looking at Alaska Air Group’s valuation multiple compared to its peers.