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Alaska Air (ALK) Q2 Earnings: Disappointment in Store?

Zacks Equity Research
Updated

Alaska Air Group, Inc. ALKis set to release second-quarter 2016 results, before the market opens on Jul 21.

In the last quarter, the company posted a positive 2.11% earnings surprise. Let’s see how things are shaping up for this announcement.

Factors at Play

Alaska Airlines has been struggling to boost growth in the second quarter. The terror attacks have rattled the airline industry with most companies registering last minute cancellation and delayed travel plan requests. Moreover, Alaska Airlines has been facing stiff competition from peers like Delta Air Lines Inc. DAL and JetBlue. We expect additional details on the Virgin America Inc. VA with this quarter’s earnings.

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Low oil prices are however driving the company’s bottom line. The airline recently reported an increase in traffic and passenger count for the month of June. With new routes on the radar, Alaska Airlines might see an improved top-line performance this quarter.

ALASKA AIR GRP Price and EPS Surprise

ALASKA AIR GRP Price and EPS Surprise | ALASKA AIR GRP Quote

Earnings Whispers

Our proven model does not conclusively show that Alaska Air 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 +0.48% as the Most Accurate estimate is pegged at $2.08 while the Zacks Consensus Estimate is lower at $2.07.

Zacks Rank: Alaska Air carries a Zacks Rank #5 (Strong Sell). Please note that we caution against Sell-rated stocks (#4 and 5) going into an earnings announcement as is the case for Alaska Air Group.

Stock to Consider

Here is a stock you may want to consider as our model shows it has the right combination of elements to post an earnings beat this quarter.

Latam Airlines Group S.A. LFL has an Earnings ESP of over +100% and a Zacks Rank #2.

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 >>


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
 
LATAM AIRLINES (LFL): Free Stock Analysis Report
 
DELTA AIR LINES (DAL): Free Stock Analysis Report
 
ALASKA AIR GRP (ALK): Free Stock Analysis Report
 
VIRGIN AMERICA (VA): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research