Financial Survey: Alaska Air Group (NYSE:ALK) and Air Canada (NYSE:ACDVF)

Alaska Air Group (NYSE:ALK) and Air Canada (OTCMKTS:ACDVF) are both mid-cap transportation companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Alaska Air Group and Air Canada, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alaska Air Group 0 8 5 1 2.50
Air Canada 0 0 6 0 3.00

Alaska Air Group currently has a consensus price target of $72.92, suggesting a potential upside of 7.07%. Air Canada has a consensus price target of $53.00, suggesting a potential upside of 41.41%. Given Air Canada’s stronger consensus rating and higher probable upside, analysts plainly believe Air Canada is more favorable than Alaska Air Group.

Dividends

Alaska Air Group pays an annual dividend of $1.40 per share and has a dividend yield of 2.1%. Air Canada does not pay a dividend. Alaska Air Group pays out 31.4% of its earnings in the form of a dividend.

Institutional & Insider Ownership

87.7% of Alaska Air Group shares are owned by institutional investors. Comparatively, 0.1% of Air Canada shares are owned by institutional investors. 0.4% of Alaska Air Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Alaska Air Group and Air Canada’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alaska Air Group $8.26 billion 1.02 $437.00 million $4.46 15.27
Air Canada $13.94 billion 0.71 $128.84 million N/A N/A

Alaska Air Group has higher earnings, but lower revenue than Air Canada.

Profitability

This table compares Alaska Air Group and Air Canada’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alaska Air Group 7.09% 18.06% 5.74%
Air Canada 5.74% 25.91% 3.75%

Summary

Alaska Air Group beats Air Canada on 9 of the 15 factors compared between the two stocks.

About Alaska Air Group

Alaska Air Group, Inc., through its subsidiaries, provides passenger and cargo air transportation services. The company operates through three segments: Mainline, Regional, and Horizon. It has a network of approximately 1,200 daily flights to 115 destinations across the United States, Mexico, Canada, and Costa Rica. The company was founded in 1932 and is based in Seattle, Washington.

About Air Canada

Air Canada provides domestic, U.S. transborder, and international airline services. It offers scheduled passenger services under the Air Canada Vacations and Air Canada Rouge brand name in the Canadian market, the Canada-U.S. transborder market, and in the international market to and from Canada, as well as through capacity purchase agreements on other regional carriers. As of December 31, 2018, the company operated a fleet of 184 aircraft under the Air Canada mainline brand name comprising 91 Boeing and Airbus narrow-body aircraft, 74 Boeing and Airbus wide-body aircraft, and 19 Embraer 190 regional jets; and 53 aircraft under the Air Canada Rouge brand name consisting of 22 Airbus A319 aircraft, 6 Airbus A321 aircraft, and 25 Boeing 767-300 aircraft. It also provides air cargo services in domestic and U.S. transborder routes, as well as on international routes between Canada and markets in Europe, Asia, South America, and Australia. In addition, the company operates, develops, markets, and distributes vacation travel packages in the Caribbean, Mexico, the United States, Europe, Central and South America, South Pacific, Australia, and Asia; and offers cruise packages in North America, Europe, and the Caribbean. Air Canada was founded in 1937 and is based in Saint-Laurent, Canada.

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