Alaska Air Group, Inc. (NYSE:ALK) just released its latest quarterly results and things are looking bullish. The results were impressive, with revenues of US$421m exceeding analyst forecasts by 28%, and statutory losses of US$1.74 were likewise much smaller than the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus, from the eleven analysts covering Alaska Air Group, is for revenues of US$3.90b in 2020, which would reflect a disturbing 41% reduction in Alaska Air Group's sales over the past 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$7.06 per share in 2020. Before this earnings announcement, the analysts had been modelling revenues of US$4.22b and losses of US$6.69 per share in 2020. So it's pretty clear consensus is more negative on Alaska Air Group after the new consensus numbers; while the analysts trimmed their revenue estimates, they also administered a per-share loss expectations.
The average price target was broadly unchanged at US$45.07, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Alaska Air Group, with the most bullish analyst valuing it at US$63.00 and the most bearish at US$31.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 41% revenue decline a notable change from historical growth of 9.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 24% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Alaska Air Group is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$45.07, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Alaska Air Group analysts - going out to 2023, and you can see them free on our platform here.
You still need to take note of risks, for example - Alaska Air Group has 5 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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