United Continental (NYSE: UAL) and Alaska Air Group (NYSE:ALK) are both transportation companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, risk, analyst recommendations, profitability, valuation and dividends.
Alaska Air Group pays an annual dividend of $1.28 per share and has a dividend yield of 2.0%. United Continental does not pay a dividend. Alaska Air Group pays out 15.5% of its earnings in the form of a dividend. Alaska Air Group has raised its dividend for 4 consecutive years.
Valuation & Earnings
This table compares United Continental and Alaska Air Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|United Continental||$37.74 billion||0.53||$2.13 billion||$7.07||9.89|
|Alaska Air Group||$7.93 billion||1.00||$1.03 billion||$8.28||7.75|
United Continental has higher revenue and earnings than Alaska Air Group. Alaska Air Group is trading at a lower price-to-earnings ratio than United Continental, indicating that it is currently the more affordable of the two stocks.
This table compares United Continental and Alaska Air Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alaska Air Group||12.96%||24.39%||7.74%|
Volatility & Risk
United Continental has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500. Comparatively, Alaska Air Group has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.
Institutional & Insider Ownership
95.3% of United Continental shares are owned by institutional investors. Comparatively, 86.3% of Alaska Air Group shares are owned by institutional investors. 0.3% of United Continental shares are owned by insiders. Comparatively, 0.6% of Alaska Air Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This is a summary of recent recommendations and price targets for United Continental and Alaska Air Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alaska Air Group||1||3||7||1||2.67|
United Continental currently has a consensus price target of $83.44, suggesting a potential upside of 19.30%. Alaska Air Group has a consensus price target of $83.33, suggesting a potential upside of 29.78%. Given Alaska Air Group’s stronger consensus rating and higher possible upside, analysts plainly believe Alaska Air Group is more favorable than United Continental.
Alaska Air Group beats United Continental on 11 of the 18 factors compared between the two stocks.
United Continental Company Profile
United Continental Holdings, Inc. (UAL) is a holding company and its principal subsidiary is United Air Lines, Inc. (United). The Company transports people and cargo through its mainline operations. It has global air rights in North America, Asia-Pacific, Europe, Middle East, Africa and Latin America. The Company, through United and its regional carriers, operates flights from its hubs at Newark Liberty International Airport (Newark Liberty), Chicago O’Hare International Airport (Chicago O’Hare), Denver International Airport (Denver), George Bush Intercontinental Airport (Houston Bush), Los Angeles International Airport (LAX), A.B. Won Pat International Airport (Guam), San Francisco International Airport (SFO) and Washington Dulles International Airport (Washington Dulles). It has contractual relationships with regional carriers to provide regional jet and turboprop service branded as United Express. These regional operations are an extension of the Company’s mainline network.
Alaska Air Group Company Profile
Alaska Air Group, Inc. is the holding company of Alaska Airlines (Alaska), Virgin America Inc., Horizon Air (Horizon) and other business units. The Company operates through three segments: Mainline, Regional and Horizon. Its Mainline segment includes Alaska’s and Virgin America’s scheduled air transportation for passengers and cargo throughout the United States, and in parts of Canada, Mexico, Costa Rica and Cuba. Its Regional segment includes Horizon’s and other third-party carriers’ scheduled air transportation for passengers across a shorter distance network within the United States under capacity purchased arrangements (CPAs). Its Horizon segment includes the capacity sold to Alaska under CPA. Alaska and Virgin America operate fleets of narrowbody passenger jets. As of December 31, 2016, it maintained two frequent flyer plans: the Alaska Airlines Mileage Plan and the Virgin America Elevate.
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