Japan Airlines (OTCMKTS:JAPSY) and Alaska Air Group (NYSE:ALK) Critical Review

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

Institutional & Insider Ownership

81.9% of Alaska Air Group shares are held by institutional investors. 1.0% of Alaska Air Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for Alaska Air Group and Japan Airlines, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alaska Air Group	2	0	12	0	2.71
Japan Airlines	0	1	0	1	3.00

Alaska Air Group currently has a consensus price target of $73.08, indicating a potential upside of 71.74%. Given Alaska Air Group’s higher possible upside, research analysts plainly believe Alaska Air Group is more favorable than Japan Airlines.

Valuation & Earnings

This table compares Alaska Air Group and Japan Airlines”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alaska Air Group	$14.14 billion	0.35	$395.00 million	$1.24	34.32
Japan Airlines	$12.11 billion	0.68	$706.45 million	$0.95	9.97

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

Dividends

Alaska Air Group pays an annual dividend of $1.50 per share and has a dividend yield of 3.5%. Japan Airlines pays an annual dividend of $0.21 per share and has a dividend yield of 2.2%. Alaska Air Group pays out 121.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Japan Airlines pays out 22.1% of its earnings in the form of a dividend.

Volatility & Risk

Alaska Air Group has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500. Comparatively, Japan Airlines has a beta of 0.42, meaning that its share price is 58% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Alaska Air Group	1.06%	8.93%	1.85%
Japan Airlines	6.48%	12.66%	4.57%

Summary

Alaska Air Group beats Japan Airlines on 9 of the 17 factors compared between the two stocks.

About Alaska Air Group

Alaska Air Group, Inc., through its subsidiaries, operates airlines. It operates through three segments: Mainline, Regional, and Horizon. The company offers scheduled air transportation services on Boeing jet aircraft for passengers and cargo in the United States, and in parts of Canada, Mexico, Costa Rica, Belize, Guatemala, and the Bahamas; and for passengers across a shorter distance network within the United States, Canada, and Mexico. Alaska Air Group, Inc. was founded in 1932 and is based in Seattle, Washington.

About Japan Airlines

Japan Airlines Co., Ltd., together with its subsidiaries, provides scheduled and non-scheduled air transport services in Japan, Asia, Oceania, North America, and Europe. The company operates through Air Transportation and Other segments. It offers passenger, ground handling, cargo and mail handling, and maintenance services. The company is also involved in the aerial work and other related business; airport peripheral business; and sale of travel package tours. As of March 31, 2023, it operated a fleet of 224 aircraft. The company was formerly known as Japan Airlines International Co., Ltd. and changed its name to Japan Airlines Co., Ltd. in April 2011. The company was founded in 1951 and is headquartered in Tokyo, Japan.