Even though many airlines have been cancelling their Boeing Max 737 orders following two fatal crashes, Alaska Air seems to be moving in the opposite direction, having doubled its orders despite the grounded situation of the aircraft.
Following the merger of Alaska Airlines and Virgin America in 2016, Alaska's management contemplated whether to keep Airbus planes or replace them with Boeing 737s – with the expectation of making a final call by end of 2017. But with the merger execution getting tougher than expected, leading to sharp profit erosion, Alaska's management had to postpone the decision as reducing near-term capex investment became the priority. So, Alaska Air chose different fleet types - Alaska flew only Boeing 737s while Virgin America used Airbus A320-family planes.
There are two main reasons why this decision is crucial. First, there is extra complexity in terms of incremental costs of maintaining mixed fleet. Second, replacing the vast majority of existing A319s and A320s with Boeing 737 MAX may also upgrade Alaska’s fleet to a more efficient technology much faster.
But isn’t it strange that Alaska is investing on an aircraft that is still grounded?
The answer may be no, as with nearly 100 successful flight tests Boeing has already developed software fix, cockpit changes, and enhanced pilot training procedures to prevent any future accidents. It expects that the grounding would be lifted by the summer of 2019.
Alaska’s pending decision to return to a single fleet type may give it the advantage to secure rock-bottom prices for up to a decade of aircraft purchases. As of the end of 2018, Alaska’s mainline passenger fleet consisted of 159 Boeing 737s and 71 Airbus A319s, A320s, and A321neos.
The 10-day RSI Indicator for ALK moved out of overbought territory on April 23, 2024. This could be a sign that the stock is shifting from an upward trend to a downward trend. Traders may want to look at selling the stock or buying put options. Tickeron's A.I.dvisor looked at 36 instances where the indicator moved out of the overbought zone. In of the 36 cases the stock moved lower in the days that followed. This puts the odds of a move down at .
The Momentum Indicator moved below the 0 level on May 01, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on ALK as a result. In of 82 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for ALK turned negative on April 29, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 50 similar instances when the indicator turned negative. In of the 50 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where ALK declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
ALK broke above its upper Bollinger Band on April 18, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.
The 50-day moving average for ALK moved above the 200-day moving average on April 22, 2024. This could be a long-term bullish signal for the stock as the stock shifts to an upward trend.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where ALK advanced for three days, in of 284 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 221 cases where ALK Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. ALK’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.362) is normal, around the industry mean (16.988). P/E Ratio (22.582) is within average values for comparable stocks, (36.565). ALK's Projected Growth (PEG Ratio) (0.000) is slightly lower than the industry average of (0.723). ALK has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.030). P/S Ratio (0.524) is also within normal values, averaging (1.015).
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. ALK’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 94, placing this stock worse than average.
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
a holding company, which through its subsidiaries, provides air transportation services
Industry Airlines