Alaska Air Group (ALK): Assessing Valuation After Expanded STARLUX Codeshare Broadens International Network

Alaska Air Group (ALK) has taken another step in its international growth strategy by announcing an expanded codeshare agreement with STARLUX Airlines. This deal adds 12 U.S. cities to the partnership, connecting 20 destinations to Taipei and boosting network flexibility for travelers.

See our latest analysis for Alaska Air Group.

It has been a busy stretch for Alaska Air Group, which recently wrapped up its HawaiianMiles integration and just finished guiding for a softer third quarter due to higher fuel costs. Even with all the shakeups, the stock’s 1-year total shareholder return of 0.15% points to modest overall progress. The latest share price sits at $48.98 as investors weigh momentum against industry challenges and international expansion.

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With the stock trading over 40% below its average analyst target and mixed signals from recent earnings guidance, investors are considering whether Alaska Air Group is undervalued in the market or if its anticipated growth is already factored in.

Most Popular Narrative: 31.4% Undervalued

Alaska Air Group’s most widely followed valuation narrative points to a fair value far above its recent closing price, reflecting a gap that hinges on the company turning ambitious initiatives into lasting profit growth.

The expansion and optimization of the Seattle international gateway, including new long-haul routes and a growing fleet of Boeing 787s, positions Alaska Air Group to benefit from sustained urban growth and increasing travel demand in West Coast cities. This is anticipated to drive higher passenger volumes and top-line revenue growth.

Read the complete narrative.

Curious about what’s fueling this bullish target? The fair value math relies on a set of aggressive growth assumptions and margin gains that could reshape expectations for both revenue and profitability. Want to see what numbers are guiding this optimistic view? The full story reveals the levers behind the headline valuation.

Result: Fair Value of $71.36 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent cost pressures from labor and integration, as well as region-specific demand risks, could challenge Alaska Air Group’s path to lasting value.

Find out about the key risks to this Alaska Air Group narrative.

Another View: Discounted Cash Flow Model

While current analyst forecasts suggest Alaska Air Group is undervalued, our DCF model presents a much more conservative perspective. The SWS DCF model estimates a fair value of just $26.60 per share, which is well below the present price. Does the market know something that the cash flows do not, or is optimism getting ahead of reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Alaska Air Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Alaska Air Group Narrative

If these perspectives do not quite fit your outlook or you prefer digging into the numbers yourself, you can build a custom narrative in just minutes. Do it your way.

A great starting point for your Alaska Air Group research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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