We assign a fundamental rating of 3 out of 10 to ALK. ALK was compared to 22 industry peers in the Passenger Airlines industry. ALK has a medium profitability rating, but doesn't score so well on its financial health evaluation. ALK has a valuation in line with the averages, but on the other hand it scores bad on growth.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year ALK was profitable.
ALK had a positive operating cash flow in the past year.
ALK had positive earnings in 4 of the past 5 years.
Of the past 5 years ALK 4 years had a positive operating cash flow.

1.2 Ratios

ALK has a Return On Assets of 0.75%. This is comparable to the rest of the industry: ALK outperforms 59.09% of its industry peers.
ALK's Return On Equity of 3.72% is fine compared to the rest of the industry. ALK outperforms 63.64% of its industry peers.
ALK has a Return On Invested Capital of 3.28%. This is comparable to the rest of the industry: ALK outperforms 54.55% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ALK is significantly below the industry average of 20.56%.

		Industry Rank	Sector Rank
ROA	0.75%
ROE	3.72%
ROIC	3.28%

ROA(3y)1.34%

ROA(5y)-0.4%

ROE(3y)5.42%

ROE(5y)-3.09%

ROIC(3y)5.24%

ROIC(5y)N/A

1.3 Margins

Looking at the Profit Margin, with a value of 1.06%, ALK is in line with its industry, outperforming 59.09% of the companies in the same industry.
ALK's Profit Margin has declined in the last couple of years.
With a Operating Margin value of 4.26%, ALK perfoms like the industry average, outperforming 59.09% of the companies in the same industry.
In the last couple of years the Operating Margin of ALK has declined.
ALK has a Gross Margin of 55.33%. This is comparable to the rest of the industry: ALK outperforms 54.55% of its industry peers.
ALK's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	4.26%
PM (TTM)	1.06%
GM	55.33%

OM growth 3YN/A

OM growth 5Y-9.13%

PM growth 3Y-24.24%

PM growth 5Y-17.41%

GM growth 3Y3.86%

GM growth 5Y0.81%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so ALK is destroying value.
ALK has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

2.2 Solvency

Based on the Altman-Z score of 1.18, we must say that ALK is in the distress zone and has some risk of bankruptcy.
ALK's Altman-Z score of 1.18 is in line compared to the rest of the industry. ALK outperforms 59.09% of its industry peers.
ALK has a Debt/Equity ratio of 1.12. This is a high value indicating a heavy dependency on external financing.
ALK's Debt to Equity ratio of 1.12 is fine compared to the rest of the industry. ALK outperforms 63.64% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	1.12
Debt/FCF	N/A
Altman-Z	1.18

ROIC/WACC0.38

WACC8.6%

2.3 Liquidity

A Current Ratio of 0.52 indicates that ALK may have some problems paying its short term obligations.
ALK has a Current ratio of 0.52. This is comparable to the rest of the industry: ALK outperforms 40.91% of its industry peers.
ALK has a Quick Ratio of 0.52. This is a bad value and indicates that ALK is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of ALK (0.49) is comparable to the rest of the industry.

		Industry Rank	Sector Rank
Current Ratio	0.52
Quick Ratio	0.49

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

ALK shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -48.66%.
The earnings per share for ALK have been decreasing by -16.71% on average. This is quite bad

EPS 1Y (TTM)-48.66%

EPS 3Y-16.71%

EPS 5YN/A

EPS Q2Q%-55.67%

Revenue 1Y (TTM)N/A

Revenue growth 3YN/A

Revenue growth 5YN/A

Sales Q2Q%2.77%

3.2 Future

Based on estimates for the next years, ALK will show a very strong growth in Earnings Per Share. The EPS will grow by 83.82% on average per year.
ALK is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.64% yearly.

EPS Next Y124.58%

EPS Next 2Y83.82%

EPS Next 3YN/A

EPS Next 5YN/A

Revenue Next Year7.49%

Revenue Next 2Y6.64%

Revenue Next 3YN/A

Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

ALK is valuated rather expensively with a Price/Earnings ratio of 19.62.
ALK's Price/Earnings ratio is a bit cheaper when compared to the industry. ALK is cheaper than 68.18% of the companies in the same industry.
ALK's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.30.
ALK is valuated reasonably with a Price/Forward Earnings ratio of 8.74.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ALK indicates a rather cheap valuation: ALK is cheaper than 86.36% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 24.32, ALK is valued rather cheaply.

		Industry Rank	Sector Rank
PE	19.62
Fwd PE	8.74

4.2 Price Multiples

95.45% of the companies in the same industry are more expensive than ALK, based on the Enterprise Value to EBITDA ratio.

		Industry Rank	Sector Rank
P/FCF	N/A
EV/EBITDA	5.01

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ALK's earnings are expected to grow with 83.82% in the coming years. This may justify a more expensive valuation.