Alaska Air Group (NYSE:ALK) & United Continental (NYSE:UAL) Critical Contrast

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Alaska Air Group (NYSE:ALK) and United Continental (NASDAQ:UAL) are both transportation companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, institutional ownership, risk, earnings, analyst recommendations, dividends and profitability.

Dividends

Alaska Air Group pays an annual dividend of $1.40 per share and has a dividend yield of 2.3%. United Continental does not pay a dividend. Alaska Air Group pays out 31.4% of its earnings in the form of a dividend. Alaska Air Group has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings for Alaska Air Group and United Continental, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alaska Air Group 0 5 9 2 2.81
United Continental 1 3 13 0 2.71

Alaska Air Group currently has a consensus price target of $77.11, indicating a potential upside of 26.90%. United Continental has a consensus price target of $102.56, indicating a potential upside of 23.91%. Given Alaska Air Group’s stronger consensus rating and higher probable upside, analysts plainly believe Alaska Air Group is more favorable than United Continental.

Volatility and Risk

Alaska Air Group has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, United Continental has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500.

Earnings and Valuation

This table compares Alaska Air Group and United Continental’s top-line 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 0.91 $437.00 million $4.46 13.62
United Continental $41.30 billion 0.53 $2.13 billion $9.13 9.07

United Continental has higher revenue and earnings than Alaska Air Group. United Continental is trading at a lower price-to-earnings ratio than Alaska Air Group, indicating that it is currently the more affordable of the two stocks.

Profitability

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

Net Margins Return on Equity Return on Assets
Alaska Air Group 5.26% 14.97% 4.90%
United Continental 5.43% 28.41% 5.82%

Insider & Institutional Ownership

88.4% of Alaska Air Group shares are owned by institutional investors. Comparatively, 99.9% of United Continental shares are owned by institutional investors. 0.4% of Alaska Air Group shares are owned by insiders. Comparatively, 0.4% of United Continental shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

United Continental beats Alaska Air Group on 10 of the 18 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 United Continental

United Continental Holdings, Inc., through its subsidiaries, provides air transportation services in North America, Asia, Europe, the Middle East, and Latin America. It transports people and cargo through its mainline and regional operations. As of December 31, 2018, the company operated a fleet of 1,329 aircraft. It also sells fuel; and offers catering, ground handling, and maintenance services for third parties. The company was formerly known as UAL Corporation and changed its name to United Continental Holdings, Inc. in October 2010. United Continental Holdings, Inc. was founded in 1934 and is headquartered in Chicago, Illinois.

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