Time To Buy Alaska Air Stock?

Alaska Air (NYSE: ALK) has had a rough year, with its price down 15% and significantly underperforming both the S&P 500’s 15% gain and its competitors. This slump can be tied to several issues that have increased costs and negatively impacted profitability. Factors such as severe weather, air traffic control problems, and a major IT outage in July have all led to higher expenses from overtime, premium pay, and passenger compensation.

As a result, Alaska Air lowered its third-quarter 2025 profit expectations, guiding for adjusted earnings per share at the low end of its previously projected range of $1.00 to $1.40. This news was met with investor concern, causing the stock to take a hit and leaving many to wonder if it’s a good time to buy.

We believe ALK stock is an attractive buy at its current price of around $55. Our conclusion is based on an analysis of the company’s recent operating performance, its current and historical financial condition, and its valuation. The analysis shows that Alaska Air has a strong operational and financial foundation, performing well across key parameters such as Growth, Profitability, Financial Stability, and Downturn Resilience.

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How Does Alaska Air’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, ALK stock looks cheap compared to the broader market.

• Alaska Air has a price-to-sales (P/S) ratio of 0.5 vs. a figure of 3.3 for the S&P 500
• And, it has a price-to-earnings (P/E) ratio of 20.9 vs. the benchmark’s 24.0

How Have Alaska Air’s Revenues Grown Over Recent Years?

Alaska Air’s Revenues have grown considerably over recent years.

• Alaska Air has seen its top line grow at an average rate of 18.6% over the last 3 years (vs. increase of 5.3% for S&P 500)
• Its revenues have grown 27.8% from $11 Bil to $13 Bil in the last 12 months (vs. growth of 5.1% for S&P 500)
• Also, its quarterly revenues grew 27.9% to $3.7 Bil in the most recent quarter from $2.9 Bil a year ago (vs. 6.1% improvement for S&P 500)

How Profitable Is Alaska Air?

Alaska Air’s profit margins are much worse than most companies in the Trefis coverage universe.

• Alaska Air’s Operating Income over the last four quarters was $806 Mil, which represents a poor Operating Margin of 6.0% (vs. 18.6% for S&P 500)
• Alaska Air’s Operating Cash Flow (OCF) over this period was $1.4 Bil, pointing to a moderate OCF Margin of 10.6% (vs. 20.3% for S&P 500)
• For the last four-quarter period, Alaska Air’s Net Income was $313 Mil – indicating a very poor Net Income Margin of 2.3% (vs. 12.7% for S&P 500)

Does Alaska Air Look Financially Stable?

Alaska Air’s balance sheet looks strong.

• Alaska Air’s Debt figure was $6.4 Bil at the end of the most recent quarter, while its market capitalization is $6.5 Bil (as of 9/22/2025). This implies a moderate Debt-to-Equity Ratio of 97.6% (vs. 21.0% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $2.1 Bil of the $20 Bil in Total Assets for Alaska Air.  This yields a strong Cash-to-Assets Ratio of 10.7% (vs. 7.0% for S&P 500)

How Resilient Is ALK Stock During A Downturn?

ALK stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on ALK stock? Our dashboard – ALK Lost 7.4% In A Week. Do You Buy Or Wait? – has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

• ALK stock fell 57.9% from a high of $73.74 on 6 April 2021 to $31.08 on 1 November 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 30 January 2025
• Since then, the stock has increased to a high of $76.60 on 19 February 2025 and currently trades at around $55

COVID-19 Pandemic (2020)

• ALK stock fell 65.4% from a high of $68.17 on 2 January 2020 to $23.56 on 20 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 15 March 2021

Global Financial Crisis (2008)

• ALK stock fell 75.7% from a high of $11.12 on 16 January 2007 to $2.70 on 15 July 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 15 April 2010

Putting All The Pieces Together: What It Means For ALK Stock

In summary, Alaska Air’s performance across the parameters detailed above are as follows:

• Growth: Very Strong
• Profitability: Weak
• Financial Stability: Strong
• Downturn Resilience: Weak
• Overall: Strong

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The Bottom Line

While Alaska Air has demonstrated strong performance across key financial metrics, its current valuation makes it particularly attractive. The stock is trading at just 0.5 times its trailing revenues, which is significantly lower than its five-year historical average of 0.9 times.

We believe this low valuation, combined with the company’s solid fundamentals, presents a compelling buying opportunity. While there’s a risk that investors might continue to be hesitant to pay a higher multiple for the stock, we expect that those with a long-term horizon of three to five years will see substantial gains from buying at current levels.

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