To top off the attractive income statement and cash flows, Alaska Air has a beautiful balance sheet — especially for an asset-heavy business. The company has more than $1.3 billion in cash and short-term investments and just under $4 billion in total liabilities. For comparison, JetBlue Airways Corporation (NASDAQ:JBLU) has about $1.5 billion in cash and more than $5.2 billion in liabilities.
Forecast says growth for cheap
According to a recent Barron’s article, Alaska Air is headed for double-digit earnings growth this year –13%, to be exact. Capacity is on the rise while the company continues to be a preferential airline among West Coast travelers (especially between the mainland U.S., Canada, and Alaska).
In the airline world, you pay up big time for a better flying experience. You even pay to eat peanuts and drink 5 ounces of soda (let’s be real — I always get a Bloody Mary). Perhaps that makes it especially refreshing that Alaska Air Group’s shares trade at just 8 times one-year forward earnings. That makes it substantially cheaper than Allegiant at 12.3, cheaper than JetBlue at 8.34, and cheaper than Spirit‘s 10.08. There are few things sweeter than to find a class-leading, niche-focused company with an effective management team doing what they do best, all selling for less than the competition.
Let the rest of the world focus on the soon-to-be biggest airline in the world. It may prove to be a valuable move for shareholders (and probably more expensive for travelers), but how much more valuable? I’ll gladly take 13% growth at 8 times earnings over route supremacy any day.
Fool contributor Michael B. Lewis and The Motley Fool have no position in any of the stocks mentioned.
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