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Alaska Air Group, Inc. (NYSE:ALK): Immense Growth Potential?

Simply Wall St

After Alaska Air Group, Inc.'s (NYSE:ALK) earnings announcement in December 2018, analysts seem highly optimistic, with earnings expected to grow by a high double-digit of 68% in the upcoming year, against the historical 5-year average growth rate of 5.9%. By 2020, we can expect Alaska Air Group’s bottom line to reach US$734m, a jump from the current trailing-twelve-month of US$437m. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Alaska Air Group in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Alaska Air Group

How will Alaska Air Group perform in the near future?

Over the next three years, it seems the consensus view of the 13 analysts covering ALK is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of ALK's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:ALK Past and Future Earnings, April 20th 2019

By 2022, ALK's earnings should reach US$912m, from current levels of US$437m, resulting in an annual growth rate of 23%. This leads to an EPS of $7.65 in the final year of projections relative to the current EPS of $3.55. In 2022, ALK's profit margin will have expanded from 5.3% to 9.4%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Alaska Air Group, I've compiled three essential factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Alaska Air Group worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Alaska Air Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Alaska Air Group? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.