Governments worldwide have reinstated lockdown and social distancing measures to limit the spread of the highly transmissible COVID-19 Delta variant. Nevertheless, most airline operators have been witnessing solid leisure travel demand of late…
Several airlines have been hiring pilots and other workers to meet a surge in demand. In addition, the Transportation Security Administration (TSA) is screening roughly two million passengers per day at airports. Furthermore, as more people get vaccinated, airline companies should continue witnessing increasing demand for their services.
Given this backdrop, we think it could be wise to bet on fundamentally sound airline companies Alaska Air Group, Inc. (ALK – Get Rating) and SkyWest, Inc. (SKYW – Get Rating). These two stocks look like bargains at their current prices, considering their immense growth potential.
Alaska Air Group, Inc. (ALK – Get Rating)
ALK provides passenger and cargo air transportation services. The Seattle, Wash.-based company operates through three segments: Mainline; Regional; and Horizon. It flies to roughly 115 destinations across the United States and North America.
On June 29, 2021, ALK launched a codeshare agreement with Qatar Airways that further strengthens the partnership between the two airlines and provides travelers with exciting and convenient options. The agreement is expected to expand ALK’s global connectivity.
The company’s operating revenues surged 263% year-over-year to $1.53 billion for the second quarter, ended June 30, 2021. ALK’s operating income came in at $549 million, versus a $288 million operating loss in the prior-year period. Its net income was $397 million compared to a $214 million net loss in the year-ago period. Also, its EPS was $3.15 compared versus a $1.74 loss per share in the previous year.
Analysts expect ALK’s EPS to be $4.85 in its fiscal year 2022, representing a 261.1% year-over-year increase. It surpassed the Street’s EPS estimates in three of the trailing four quarters. In addition, the company’s revenue is expected to increase 159.8% year-over-year to $1.82 billion for the quarter ending September 30, 2021. Over the past year, the stock has gained 61% to close yesterday’s trading session at $55.24.
ALK’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. It has a B grade for Growth, Momentum, Sentiment, and Quality.
Click here to see the additional POWR Ratings for ALK (Stability and Value). ALK is ranked #3 of 30 stocks in the Airlines industry.
SkyWest, Inc. (SKYW – Get Rating)
SKYW operates a regional airline in the United States. The company operates through two segments: SkyWest Airlines and SkyWest Leasing. It also leases regional jet aircraft and spare engines to third parties and provides airport customer and ground handling services for other airlines. SKYW is based in St. George, Utah.
On May 12, 2021, SKYW agreed with Alaska Airlines to purchase and…
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