ALK
Alaska Air Group, Inc.
$49.81
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Fair Value
Trading 16.8% below fair value
You pay
$49.81
Bear
$47.89
Fair
$59.86
Bull
$71.84
Bear
$47.89
-3.9%
$2.61 × 18x P/E
Fair
$59.86
+20.2%
$2.61 × 22x P/E
Bull
$71.84
+44.2%
$2.61 × 27x P/E
Key Value Driver
Normalized P/E multiple (22x base case)
Implied Market Multiple
19.1x
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 $63.00 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $59.86 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