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Alaska Air Group (ALK) Q1 Earnings: Stock to Disappoint?

Alaska Air Group, Inc. ALK is set to release first-quarter 2016 results, before the market opens on Apr 21.

In the last quarter, the company posted a positive 2.1% earnings surprise. Let’s see how things are shaping up for this announcement.

Factors at Play

Despite the decline in fuel prices, Alaska Air Group continues to face stiff competition from other low-cost carriers. Moreover, the slump in fuel prices has encouraged other legacy carriers to slash fares in order to compete with the low-cost airlines. In addition, strong U.S. dollar may impact the top line of the carrier in the upcoming quarter.

Earnings Whispers

Our proven model does not conclusively show that Alaska Air Group is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or at least #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for the company currently stands at -1.41% as the Most Accurate estimate is pegged at $1.40 while the Zacks Consensus Estimate is higher at $1.42.

Zacks Rank: Alaska Air Group carries a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Meanwhile, please note that Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

SkyWest Inc. SKYW with an Earnings ESP of +16.00% and a Zacks Rank #2.

United Continental Holdings, Inc. UAL with an Earnings ESP of +0.86% and a Zacks Rank #3.

Canadian Pacific Railway Limited CP with an Earnings ESP of +1.11% and a Zacks Rank #1.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SKYWEST INC (SKYW): Free Stock Analysis Report
 
ALASKA AIR GRP (ALK): Free Stock Analysis Report
 
CDN PAC RLWY (CP): Free Stock Analysis Report
 
UNITED CONT HLD (UAL): Free Stock Analysis Report
 
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