* Note: Prices are in Million (M) USD.
Description:
Alaska Air Group is an airline holding company based in SeaTac, Washington, United States.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $778 M
Debt : $6,373 M
EBITDA : $1,328 M
Net Debt (Debt - Cash): $5,595 M
Since EBITDA cannot cover net debt within 3 years, Avoid This Stock.
This criteria used industry in which company operates:
Sector: Industrials
Industry: Airlines
Based on industry, 3 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 12.47
Since Forward PE Ratio is less than 15, 5 points assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 20 overlapping fiscal years (max 20).Average Free Cash Flow: $178 M
Average Revenue: $5,911 M
Revenue Converted To Free Cash Flow (%): 3.0%
Since Free Cash Flow (FCF) to Revenue percentage is less than 15, 1 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2024-12-31): $11,735 M
Revenue 4 Years Ago (2020-12-31): $3,566 M
Last 5 Years Average Revenue Growth: 46%
Since Revenue Growth is greater than 20, 5 points assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2024-12-31): $128 M
Share Count 5 Years Ago (2020-12-31): $123 M
Company is not buying back its own shares, 0 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $6.68
Trailing 12-Month Earnings Per Share (EPS): $3.39
Average Earnings Per Share (EPS): $5.04
Dividend Per Share (DPS): $0
Payout Ratio: 0%
Dividend Yield: 0%
Since Dividend Per Share is less than or equal to 0, 0 point assigned.
Since Dividend Yield is less than 1, 0 point assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Using last 20 valid ROE years (max 20).Average ROE: 11.2%
Since Average ROE is between 10 - 20, 3 points assigned.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $63
52-Week Low: $34
Threshold Price (15% Above 52-Week Low): $40
Since Current price is not within 15% threshold, 0 point assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $6,614 M
Since Market Cap is less than 10B, 1 point assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 2% exposure of Total Portfolio.
Value-Trade has assigned 18 points to above Alaska Air Group Inc (ALK) stock.
Heads up: One or more P/E inputs look exaggerated and may skew the blend.
• Growth Based PE
45.00 (>2× median)
Further research is recommended; please use your own due diligence.In such cases, multiplying earnings by the long-run average P/E typically gives a closer, more reliable fair value.
Rule of thumb: Last 15 Years Avg P/E (20.72)
× EPS ($5.04) = $104.33.
Last 15 Years Avg PE 20.72, Fair Value PE 12, Industry Based PE 10, Growth Based PE 45, RCFC Based PE 14.4, ROE Based PE 18.94, Risk-Free Anchored PE (25% MoS) 17.08. Based on these 7 values, average assigned is 19.73. Value-Trades has assined P/E value 19.73. Since an average (Current Year EPS + Next Year EPS) earning per share is $5.035.
The fair value of Alaska Air Group Inc (ALK) stock should be (19.73 x $5.035) = $99.37.
