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Which Is A Better Pick – Alaska Air Or UAL Stock?

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Which Is A Better Pick – Alaska Air Or UAL Stock?


Given its attractive valuation, we believe Alaska Air stock (NYSE: ALK) is a better pick than its peer United Airlines stock (NASDAQ
NDAQ
: UAL). If we look at stock returns, United Airlines, with 26% returns this year, has fared much better than Alaska Air, down 6%, and the broader S&P 500 index, up 17%. There is more to the comparison, and in the sections below, we discuss why we believe ALK will offer better returns than UAL in the next three years. We compare a slew of factors, such as historical revenue growth, returns, and valuation, in an interactive dashboard analysis of Alaska Air vs. United Airlines: Which Stock Is A Better Bet? Parts of the analysis are summarized below.

Interestingly, ALK has had a Sharpe Ratio of -0.1 while the figure stood at 0.1 for UAL, lower than 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.

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1. United Airlines’ Revenue Growth Is Slightly Better

  • United Airlines’ revenue growth has been slightly better, with a 26% average annual growth rate in the last three years, compared to 23% for Alaska Air.
  • The rise in revenues for both airlines over the recent years can be attributed to a rebound in air travel demand, with passenger traffic and ticket yield rising meaningfully in the recent past.
  • For perspective, Alaska Air’s available seat miles declined 21% between 2019 and 2021 but surged 16% in 2022. Similarly, its passenger revenue per available seat mile fell 11% between 2019 and 2021 but rose 35% y-o-y in 2022.
  • In comparison, United Airlines’ ASM decreased 27% between 2019 and 2021 before rising 39% y-o-y in 2022. Its PRASM declined 19% and increased 43% over the same period, respectively.
  • Looking at the last twelve months, United Airlines’ 43% sales growth has fared better than 26% for Alaska Air.
  • Our Alaska Air Revenue Comparison and United Airlines Revenue Comparison dashboards provide more insight into the companies’ sales.

2. United Airline Is More Profitable

  • Alaska Air’s reported operating margin slid from 12% in 2019 to -50% in 2020 before recovering to 1% in 2022. In comparison, United Airlines’ operating margin fell from 9% in 2019 to -49% in 2020 but rose to 2% in 2022.
  • Looking at the last twelve-month period, United Airlines’ operating margin of 5% fares better than 1% for Alaska Air.
  • Alaska Air’s margin metric is partly being weighed down by the costs associated with the retirement of its Airbus fleet. Looking forward, the company is likely to have a better margin profile with lower costs associated with pilot training.
  • Our Alaska Air Operating Income Comparison and United Airlines Operating Income Comparison dashboards have more details.
  • Looking at financial risk, both are comparable. While Alaska Air’s 122% debt as a percentage of equity is lower than 194% for United Airlines, its 16% cash as a percentage of assets is lower than 26% for the latter, implying that Alaska has a comparatively better debt position, but United Airlines has more cash cushion.

3. The Net of It All

  • We see that United Airlines has seen superior revenue growth, is more profitable, and has more cash cushion. It is also trading at a slightly lower valuation multiple.
  • However, looking at prospects, using P/S as a base, due to high fluctuations in P/E and P/EBIT, we believe Alaska Air will likely offer better returns over the next three years.
  • If we compare the current valuation multiples to the historical averages, ALK fares slightly better. Alaska Air stock trades at 0.5x sales compared to its last five-year average of 1.1x, and United Airlines stock trades at 0.3x revenues vs. the last five-year average of 0.6x.
  • Our Alaska Air Valuation Ratios Comparison and United Airlines Valuation Ratios Comparison have more details.

While ALK may outperform UAL in the next three years, 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.

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Alaska

State of Alaska will defend its right to facilitate oil and gas development

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State of Alaska will defend its right to facilitate oil and gas development


Last week, Superior Court Judge Andrew Guidi indicated he will rule that Alaska does not have authority to permit access across its lands to facilitate oil and gas development on the North Slope.

The Alaska Dept. of Natural Resources plans to fight and appeal any final adverse ruling that undermines the state’s constitutional interests in resource development.

The Department of Natural Resources has issued a permit allowing Oil Search Alaska (OSA) to cross the Kuparuk River Unit, operated by Conoco Phillips Alaska, to develop the Pikka Unit. As described in the State’s brief to the court, “the denial of such access implicates the delay of development of millions of barrels of oil and billions of dollars of public revenues.”

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“The State of Alaska has a constitutional obligation to maximize the development of our resources,” DNR Commissioner John Boyle said on Nov. 22. “We have to confirm with the Supreme Court that we have the authority to permit access for all developers to ensure we can meet this obligation.”

Once the Superior Court issues the final judgement, Alaska will be able to file its appeal. This is expected to occur in the coming weeks.

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Close encounters with the Juneau kind: Woman reports strange lights in Southeast Alaska skies

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Close encounters with the Juneau kind: Woman reports strange lights in Southeast Alaska skies


ANCHORAGE, Alaska (KTUU) – For Juneau resident Tamara Roberts, taking photos of the northern lights was just a hobby — that is until a different light altogether caught her eye.

Capturing what she’s called strange lights in the skies of Juneau near her home on Thunder Mountain, Roberts said she’s taken 30 to 40 different videos and photos of the lights since September 2021.

“Anytime I’m out, I’m pretty sure that I see something at least a couple times a week,” Roberts said. “I’m definitely not the only one that’s seeing them. And if people just pay more attention, they’ll notice that those aren’t stars and those aren’t satellites.”

Roberts has been a professional photographer for over 20 years. She said she changed interests from photographing people to wildlife and landscape when she moved to Juneau 13 years ago.

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Once she started making late-night runs trying to capture the northern lights, she said that’s when she started encountering her phenomenon.

Roberts said not every encounter takes place above Thunder Mountain: her most recent sighting happened near the Mendenhall Glacier while her stepmom was visiting from Arizona.

“She’d never been here before, so we got up and we drove up there, and lo and behold, there it was,” Roberts said. “I have some family that absolutely thinks it’s what it is, and I have some family that just doesn’t care.”

Roberts described another recent encounter near the glacier she said was a little too close for comfort. While driving up alone in search of the northern lights, she expected to see other fellow photographers out for the same reason as she normally does.

But this night was different.

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“I’ve gone up there a million times by myself, and this night, particularly, it was clear, it was cold and the [aurora] KP index was high … so as I’m driving up and there’s nobody there. And I was like, Okay, I’ll just wait and somebody will show up.’ So I backed up into the parking spot underneath the street light — the only light that’s really there on that side of the parking lot — and I turned all my lights off, left my car running, looked around, and there was that light right there, next to the mountain.”

Roberts said after roughly 10 minutes of filming the glowing light, still not seeing anyone else around, she started to get a strange feeling that maybe she should leave.

“I just got this terrible gut feeling,” Roberts said. “I started to pull out of my parking spot and my car sputtered. [It] scared me so bad that I just gunned the accelerator, but my headlights … started like flashing and getting all crazy.

“I had no headlights, none all the way home, no headlights.”

According to the Juneau Police Department, there haven’t been any reports of strange lights in the sky since Sept. 14, when police say a man was reportedly “yelling about UFOs in the downtown area.”

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Responding officers said they did not locate anything unusual, and no arrests were made following the man’s report.

The National Oceanic and Atmospheric Administration National Weather Service in Juneau also said within the last seven days, no reports of unusual activity in the skies had been reported. The Federal Aviation Administration in Juneau did not respond.

With more and more whistleblowers coming forward in Congressional hearings, Roberts said she thinks it’s only a matter of time before the truth is out there.

“Everybody stayed so quiet all these years for the fear of being mocked,” Roberts said. “Now that people are starting to come out, I think that people should just let the reality be what it is, and let the evidence speak for itself, because they’re here, and that’s all there is to it.”

See a spelling or grammar error? Report it to web@ktuu.com

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‘We’re ready to test ourselves’: UAA women’s hoops faces tallest task yet in another edition of the Great Alaska Shootout

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‘We’re ready to test ourselves’: UAA women’s hoops faces tallest task yet in another edition of the Great Alaska Shootout


ANCHORAGE, Alaska (KTUU) – Heading into Friday’s game with a 6-1 record, Alaska Anchorage women’s basketball is faced with a tall task.

The Seawolves are set to face Division I Troy in the opening round of the 2024 Great Alaska Shootout. Friday’s game is the first meeting between the two in program history.

“We’re gonna get after it, hopefully it goes in the hoop for us,” Seawolves head coach Ryan McCarthy said. “We’re gonna do what we do. We’re not going to change it just because it’s a shootout. We’re going to press these teams and we’re going to try to make them uncomfortable. We’re excited to test ourselves.”

Beginning the season 1-4, the Trojans have faced legitimate competition early. Troy has played two ranked opponents to open the season, including the 2023 national champion and current top-10 ranked Louisiana State University on Nov. 18. The Trojans finished runner-up in the Sun Belt Conference with a 15-3 record last season.

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“At the end of the day, they’re women’s basketball players too. They’re the same age as us and they might look bigger, faster and stronger, but we have some great athletes here,” junior guard Elaina Mack said. “We’re more disciplined, we know that we put in a lot of work, and we have just as good of a chance to win this thing as anybody else does.”

The 41st edition of the tournament is also set to feature Vermont and North Dakota State. The two Div. I squads will battle first ahead of UAA’s match Friday night.

All teams will also play Saturday in a winner and loser bracket to determine final results.

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