ALK
Alaska Air Group, Inc.
$41.34
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 32.1% below fair value
You pay
$41.34
Bear
$48.69
Fair
$60.86
Bull
$73.04
Bear
$48.69
+17.8%
$2.61 × 18x P/E
Fair
$60.86
+47.2%
$2.61 × 22x P/E
Bull
$73.04
+76.7%
$2.61 × 27x P/E
Key Value Driver
Normalized P/E multiple (22x base case)
Implied Market Multiple
15.8x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $67.00 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $60.86 per share.
Warnings
The company's reported profits differ from official accounting profits by 200%. Check what costs are being left out of the adjusted number.
The company pays out 164% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples