Alaska Air Group (NYSE: ALK) and Allegiant Travel (NASDAQ:ALGT) are both mid-cap transportation companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, risk, institutional ownership, earnings, profitability and analyst recommendations.
Risk & Volatility
Alaska Air Group has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, Allegiant Travel has a beta of 0.06, meaning that its stock price is 94% less volatile than the S&P 500.
This table compares Alaska Air Group and Allegiant Travel’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Alaska Air Group||$7.93 billion||0.97||$1.03 billion||$6.64||9.41|
|Allegiant Travel||$1.50 billion||1.61||$194.90 million||$9.55||15.66|
Alaska Air Group has higher revenue and earnings than Allegiant Travel. Alaska Air Group is trading at a lower price-to-earnings ratio than Allegiant Travel, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current recommendations for Alaska Air Group and Allegiant Travel, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alaska Air Group||1||4||7||1||2.62|
Alaska Air Group currently has a consensus price target of $83.00, suggesting a potential upside of 32.80%. Allegiant Travel has a consensus price target of $164.36, suggesting a potential upside of 9.90%. Given Alaska Air Group’s stronger consensus rating and higher probable upside, analysts plainly believe Alaska Air Group is more favorable than Allegiant Travel.
Insider and Institutional Ownership
93.4% of Alaska Air Group shares are held by institutional investors. Comparatively, 89.3% of Allegiant Travel shares are held by institutional investors. 0.6% of Alaska Air Group shares are held by company insiders. Comparatively, 20.8% of Allegiant Travel shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This table compares Alaska Air Group and Allegiant Travel’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alaska Air Group||11.64%||20.43%||6.60%|
Alaska Air Group pays an annual dividend of $1.28 per share and has a dividend yield of 2.0%. Allegiant Travel pays an annual dividend of $2.80 per share and has a dividend yield of 1.9%. Alaska Air Group pays out 19.3% of its earnings in the form of a dividend. Allegiant Travel pays out 29.3% 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. Alaska Air Group has increased its dividend for 4 consecutive years. Alaska Air Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Alaska Air Group beats Allegiant Travel on 10 of the 17 factors compared between the two stocks.
About Alaska Air Group
Alaska Air Group, Inc., through its subsidiaries, provides passengers and cargo air transportation services. It also focuses on providing ground and ramp handling services to airlines. The company operates through three segments: Mainline, Regional, and Horizon. It has a network of approximately 1,200 daily flights to 118 destinations across the United States, Mexico, Canada, and Costa Rica. The company was founded in 1932 and is based in Seattle, Washington.
About Allegiant Travel
Allegiant Travel Company, a leisure travel company, focuses on the provision of travel services and products to residents of under-served cities in the United States. The company offers scheduled air transportation on limited frequency nonstop flights between under-served cities and leisure destinations. As of February 2, 2018, it operated a fleet of 37 MD-80 aircraft and 53 Airbus A320 series aircraft provided services on 396 routes to 119 cities. The company also provides air-related services and products in conjunction with air transportation, including convenience fees, baggage fees, advance seat assignments, travel protection products, change fees, priority boarding, food and beverage purchases on board, and other air-related services, as well as use of its call center for purchases. In addition, it offers third party travel products, such as hotel rooms, ground transportation, and attractions; and air transportation services through fixed fee agreements and charter service on a year-round and ad-hoc basis. Further, the company offers leases spare engines to a third party; and offers management solutions to golf courses. Allegiant Travel Company was founded in 1997 and is based in Las Vegas, Nevada.
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