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Alaska Air Stock: What Heights Will It Reach in 4Q16?

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Nov. 20 2020, Updated 3:24 p.m. ET

Alaska Air stock

After a disappointing performance in the first half of 2016, Alaska Air Group (ALK) stock has rose significantly in the second half of the year. Investors’ fears that Alaska Air overpaid to acquire Virgin America (VA) hung over the company in the first half of the year. The stock fell from $80 to $55. But it has since recovered to $94.30 as of January 13, 2017.

In 3Q16, Alaska Air stock rose almost 12.0%. In 4Q16, it rose a whopping 34.0%. Although changing industry dynamics have played a role, investments by activist investor Warren Buffet also provided a significant boost to the airline.

For 2016, Alaska Air stock has risen ~10.0%. Some of its peers have also risen. Spirit Airlines (SAVE) rose the most at 33.5%, followed by United Continental Holdings (UAL) that rose 21.9% and Southwest Airlines (LUV) that rose 13.5%.

American Airlines (AAL) was also in the green in 2016 with a ~6.6% rise. However, Delta Air Lines fell ~5.9%, followed by Allegiant Travel (ALGT) and JetBlue (JBLU), which fell 4.0% and 3.9%, respectively.

The broader market tracked by the S&P 500 index (SPY) rose ~8.7% in 2016. Since airline services are discretionary spends and compete for consumer’s money, it makes more sense to compare an airline’s performance with the consumer discretionary sector.

The Consumer Discretionary Select Sector SPDR ETF (XLY) rose 3.7% in 2016. The Dow Jones US Airlines Index (DJUSAR) rose 6.3% in 2016.

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Series overview

Alaska Air Group is expected to announce its 4Q16 financial results on January 26, 2017. In the next part of this series, we’ll see what we can expect for 4Q16 and, more importantly, for 2017. We’ll also look at some key indicators you should keep an eye on.

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