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What’s Next For Alaska Air Stock After A 24% Fall This Year And A Downbeat Q3?

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What’s Next For Alaska Air Stock After A 24% Fall This Year And A Downbeat Q3?


Alaska Air (NYSE: ALK) recently reported its Q3 results, with revenues and earnings falling below the street estimates. The company reported revenue of $2.8 billion, reflecting no growth from the prior year period and below the $2.9 billion street estimate. Its adjusted earnings of $1.83 per share were down 28% y-o-y and below the consensus estimate of $1.86 per share. In this note, we discuss Alaska Air’s stock performance, key takeaways from its recent results, and valuation.

ALK stock has suffered a sharp decline of 40% from levels of $50 in early January 2021 to around $30 now, vs. an increase of about 15% for the S&P 500 over this roughly 3-year period. ALK has had a poor run, with the stock losing value in each of the last three years. Returns for the stock were 0% in 2021, -18% in 2022, and -24% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 12% in 2023 – indicating that ALK underperformed the S&P in 2021 and 2023.

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In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the industrial sector, including UPS, CAT, and UNP, and even for the mega-cap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index, less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could ALK face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months – or will it see a recovery? From a valuation perspective, ALK stock looks attractive and will likely see higher levels over time. We estimate Alaska Air’s Valuation to be $47 per share, reflecting over 45% upside from its current levels of $32. Our forecast is based on a 10x P/E multiple for ALK and expected earnings of $4.75 on a per-share and adjusted basis for the full year 2023. The company lowered its earnings outlook to now be in the range of $4.25 and $4.75 (vs. the $5.50 and $7.50 range earlier).

Alaska Air’s revenue of $2.8 billion in Q3 was flat y-o-y. The company reported a 14% rise in available seat miles, while the load factor was down 190 bps, and yield also declined 10%, weighing on the overall top-line growth. The company saw its adjusted pre-tax margin plunge to 11.4% from 15.6% in the prior-year quarter. It expects the metric to fall between 7% and 8% for the full year 2023. Rising fuel prices will likely weigh on the company’s bottom line in the near-term. Flat revenues and margin contraction led to a 28% y-o-y fall in the bottom line to $1.83 on a per-share and adjusted basis in Q3’23.

ALK stock looks attractive at $32, trading at just 0.4x sales, compared to the last five-year average of 1.1x We believe investors will likely be better off picking ALK after its recent fall for robust gains in the long run. However, rising fuel prices and falling yields remain key risk factors in realizing these gains.

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While ALK stock looks undervalued, it is helpful to see how Alaska Air’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Invest with Trefis Market Beating Portfolios

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Genetic diversity in Alaska’s red king crab may provide climate change resilience

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Genetic diversity in Alaska’s red king crab may provide climate change resilience


Red king crab on the deck of a research vessel. Credit: NOAA Fisheries / Erin Fedewa

New genetic research on the Alaska red king crab reveals previously undiscovered diversity among different regions, suggesting the species is more resilient to climate change and changing ocean conditions.

Maintaining genetic diversity within and among populations is vital to ensure species are resilient to challenging conditions. Without it, a single disease or set of conditions—such as a prolonged change in ocean acidification—could drive a species to extinction.

Fortunately, new research has revealed more genetic diversity across Alaska’s red king crab populations than originally documented. This suggests that the species will be more resilient in the face of changing conditions like ocean warming. However, any efforts to enhance red king crab populations need to be careful not to affect this genetic diversity.

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King crab in Alaska

Historically, the red king crab fishery was Alaska’s top shellfish fishery. It’s embedded in the culture of Alaska’s working waterfronts and king crabs have been the centerpiece of holiday feasts around the world. However, the red king crab fishery collapsed in the 1980s. Since 1983, most populations have been depressed statewide and the Gulf of Alaska fishery remains closed.

Wes Larson is co-author of the research published in Evolutionary Applications and the genetics program manager at the NOAA Alaska Fisheries Science Center. He reflects, “When it comes to understanding crab biomass declines and how to recover populations, we need to better understand population structure and local adaptation. There are a lot of concerned and invested fishermen, processors, and community members getting more engaged in these issues and it’s propelling new and innovative research.”

To dig into this need, Larson and a team of collaborators embarked on a study to generate whole genome sequencing data on red king crab in different locations across Alaska. The benefit of whole genome sequencing over previous methods is that it’s akin to reading the full story of an organism’s makeup instead of just a chapter or two. This holistic approach offers more robust analysis in order to tease apart similarities and differences between locations.

New genetics research in Alaska

Traditionally, information about commercially important species comes from fisheries-dependent data (collected on commercial fishing vessels) or independent surveys (from scientific research vessels). From these, we gather data on abundance, size, sex, reproductive status, diet, etc.

Genetics tools help to fill in the information gaps from traditional surveys, and can be used to:

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  • Define stock of origin
  • Assess local adaptation
  • Document genetic diversity and inbreeding

Whole genome sequencing builds on past methods by enhancing our ability to detect important differences between populations at finer scales.

Red king crab live in diverse environments—from coastal bays in the north, to open sea shelves in the Bering Sea. They also live in small bays and fjords fed by glacial melt in Southeast Alaska and the Gulf of Alaska. King crab in Alaska generally inhabit the following five regions:

  1. Southeast Alaska
  2. Gulf of Alaska
  3. Aleutian Islands
  4. Eastern Bering Sea
  5. Norton Sound / Chukchi Sea.

Previous genetic studies have hypothesized that king crab from these regions are split into three genetic groups:

  1. Southeast Alaska
  2. Gulf of Alaska / East Bering Sea
  3. Aleutian Islands / Norton Sound.

However, these studies used older genetic techniques, which may not provide the resolution necessary to accurately define genetic structure. The current study reinvestigated the genetic structure of the red king crab in all five regions using high-resolution data derived from whole genome sequencing.

Genetic diversity in Alaska red king crab may provide climate change resilience
Map of collection sites and years of collections colored by regions. Credit: NOAA Headquarters

The results of this study were revealing and informative. Scientists found substantial genetic structure within populations and genetic diversity between regions. In some cases, scientists observed this diversity between populations separated by only a few hundred kilometers.

“Crabs have pelagic larvae, so this is very surprising given the potential for ocean currents to distribute these larvae long distances,” said Larson. “However, these populations do not seem to be mixing and have become genetically isolated.”

Ultimately, the previous hypothesis of three genetic groupings was revised by this whole genome sequencing study. This updated method provided more clarity of fine-scale genetic differences than previous methods. The data indicate that there are six, possibly seven, genetically distinct populations:

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  1. Southeast Alaska
  2. Gulf of Alaska
  3. Aleutian Islands
  4. Bristol Bay
  5. Pribilof Islands
  6. Norton Sound / Chukchi Sea

Data showed previously unrecognized differences between the Gulf of Alaska and East Bering Sea regions. And the East Bering Sea region is split into separate Bristol Bay and Pribilof Islands populations.

Researchers also found that the Aleutian Islands and Norton Sound/Chukchi Sea regions are unique. Data suggests that Norton Sound and Chukchi Sea may be distinct as well. However, further research is required to determine if this is the case.

Scientists attribute this genetic diversity to a combination of factors including populations deriving from different glacial refugia. These are areas that remained ice-free during the lce Age. And more recently, natural selection (genetic changes driven by adaptation) and genetic drift (genetic changes that are random) likely contributed to this diversity. The research documented evidence of local adaptation in most populations.

Fisheries management implications

The scientists’ approach to sequence the whole genome of red king crabs was a more detailed method using orders of magnitude more data than previous studies.

It also confirmed that fisheries are being managed effectively by region in Alaska. For example, crab stocks in the Gulf of Alaska, Aleutian Islands, Bristol Bay, and Pribilofs Islands regions are each managed separately. Prior to this new research, the Bristol Bay and Pribilof Islands were not found to be genetically distinct. This new understanding reinforces that we should continue to manage them separately.

Understanding population structure, and these newly discovered genetic signals of local adaptation, is also important for preventing overfishing on genetically unique populations. And it’s critical to provide information on how local adaptations influence responses to different climatic conditions.

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We may find that some populations have the potential to fare better in future climate conditions that are likely as climate change progresses. Genetics can also reveal shifts in population distribution. Some shifts may already be underway in the Bering Sea as the North Pacific warms.

Finally, with the Gulf of Alaska population being depressed, scientists would expect a higher potential for inbreeding and lower genetic diversity. However, researchers found no evidence of reduced diversity, meaning genetic health did not suffer as the population declined. This foundation of genetic diversity means that genetic factors should not limit recovery.

This research also provides important data that can be used to inform broodstock selection for red king crab enhancement programs. Enhancement programs raise young crabs in hatcheries and release them into the wild to enhance the population.

Given the genetic diversity of red king crab across Alaska, it’s vital to prioritize local broodstock for enhancement before sourcing from elsewhere. This helps to keep genetic diversity intact and ensures that the genetic integrity of locally adapted populations is not jeopardized.

More information:
Carl A. St. John et al, Whole Genome Sequencing Reveals Substantial Genetic Structure and Evidence of Local Adaptation in Alaskan Red King Crab, Evolutionary Applications (2024). DOI: 10.1111/eva.70049

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Citation:
Genetic diversity in Alaska’s red king crab may provide climate change resilience (2025, January 13)
retrieved 13 January 2025
from https://phys.org/news/2025-01-genetic-diversity-alaska-red-king.html

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part may be reproduced without the written permission. The content is provided for information purposes only.





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80 mph, 90 mph and higher: Here’s a rundown of peak gusts recorded across Southcentral Alaska in Sunday’s storm

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80 mph, 90 mph and higher: Here’s a rundown of peak gusts recorded across Southcentral Alaska in Sunday’s storm


By Anchorage Daily News

Updated: 2 hours ago Published: 3 hours ago

Here’s a list of peak wind gusts measured at various locations by the National Weather Service across Southcentral Alaska in Sunday’s storm. Crews were working Sunday evening to restore electricity to thousands of people in Anchorage and the Mat-Su.

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Gusts of more than 60 mph were recorded at various locations across the region, with gusts exceeding 80 mph at several locations on the Anchorage Hillside and higher elevations.

High winds, rain batter Anchorage and Mat-Su, with power outages reported across region

The readings were collected from a variety of sources with varying equipment and exposures, the weather service noted. Not all data listed are considered official, the weather service said. See the full list here.

Anchorage

Ted Stevens Anchorage International Airport: 62 mph

Merrill Field: 66 mph

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Lake Hood: 59 mph

JBER – Elmendorf: 69 mph

JBER – Fort Richardson: 73 mph

Northeast Anchorage: 75 mph

South Anchorage: 75 mph

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Glen Alps: 84 mph

Potter Valley: 91 mph

Bear Valley: 110 mph*

Arctic Valley: 107 mph*

Glenn Hwy Eagle River Bridge: 88 mph

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Glenn Hwy S Curves: 62 mph

South Fork Eagle River: 86 mph

Birchwood Airport: 53 mph

Bird Point: 75 mph

Alyeska Weather Station: 112 mph

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Alyeska Summit: 99 mph

Portage Glacier: 84 mph

Matanuska Valley

Palmer Airport: 67 mph

Wasilla Airport: 47 mph

Fishhook: 47 mph

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Duck Flats: 6 mph

Susitna Valley

Willow: 36 mph

Eastern Kenai Peninsula

Seward Airport: 51 mph

Kenai Lake: 33 mph

Granite Creek: 25 mph

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Seward / Sterling Hwys (Y): 42 mph

Whittier Airport: 60 mph*

Western Kenai Peninsula

Kenai Airport: 53 mph

Soldotna Airport: 39 mph

Kenai Beach: 46 mph

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Sterling Highway at Jean Lake: 64 mph

Nikiski: 36 mph

Anchor Point: 31 mph

Homer Airport: 46 mph

Homer Boat Harbor: 42 mph

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Seldovia Airport: 41 mph

Eastern Prince William Sound

Cordova Airport: 73 mph

Cordova Marine Ferry Terminal: 74 mph

Valdez Airport: 25 mph

Valdez Port: 23 mph

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Thompson Pass: 47 mph

Copper River Basin

Gulkana Airport: 56 mph

Chitina: 37 mph

Denali Hwy at MacLaren River: 38 mph

Eureka: 36 mph

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Kodiak Island

Kodiak Airport: 52 mph

Kodiak – Pasagshak Road: 61 mph

Akhiok: 45 mph

*Denotes site stopped transmitting wind data following report of highest wind gust.

“Observations are collected from a variety of sources with varying equipment and exposures. We thank all volunteer weather observers for their dedication. Not all data listed are considered official.”

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Alaska Airlines faces heat after UFC champion Khabib Nurmagomedov gets removed from flight: 'Shame on you'

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Alaska Airlines faces heat after UFC champion Khabib Nurmagomedov gets removed from flight: 'Shame on you'


Alaska Airlines is getting called out on social media after a clip surfaced showing a famous UFC fighter get into a dispute on-board until he was escorted off his flight. The video shows Russian hall of fame athlete Khabib Nurmgomedov debating airline staff in the U.S. while he was sitting in the exit row on the plane.

The video of the incident, which reportedly took place at Harry Reid International Airport in Las Vegas on Saturday, shows an employee telling the 36-year-old mixed martial artist he either has to switch seats or get off the plane. “They’re not comfortable with you sitting in the exit row,” the worker added.

“It’s not fair,” said Nurmgomedov, who was reportedly flying to Los Angeles, to which the worker replied, “It is fair. Yes, it is.”

Nurmgomedov explained that when he was checking in for the flight, he was asked he if knew English, to which he said he did. The airline worker responded, “I understand that, but it’s also off of their judgement. I’m not going to do this back-and-forth. I will call a supervisor.”

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The employee reiterated the athlete could either take a different seat on the plane, or staff could “go ahead and escort” him off the flight. She asked “which one are we doing?” and then replied to Nurmgomedov saying they were going to have to rebook him on a different flight.

Across social media, people have been calling out Alaska Airlines asking why they had him removed from the plane. Many called for others to boycott the airline, and some claimed the staff were profiling Nurmgomedov, who is Muslim.

“Why did you remove Khabib from your plane? His fans need to know! I hope he sues you,” an Instagram user wrote on the airline’s most recent post.

“Are you aware of who Khabib is? His legacy surpasses that of the entire airline,” another chimed in.

“Shame on you, Alaska Airline. We all boycotting them,” a TikTok user added.

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“What is the reason!? Because they don’t feel comfortable he’s sitting by a window?” another questioned.

Neither Nurmgomedov or Alaska Airlines have yet commented on the situation.





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