Alaska Air(US:ALK) ZACKS·2025-09-18 16:36Core Insights - Alaska Air Group, Inc. (ALK) has issued disappointing third-quarter 2025 earnings guidance due to higher fuel expenses and operational challenges [1][2] - The adjusted earnings per share (EPS) for Q3 2025 is projected to be at the low end of the previous range of $1.00-$1.40, with the Zacks Consensus Estimate currently at $1.35 [2][4] - The company is facing increased fuel cost expectations, now projected at $2.50–$2.55 per gallon, up from nearly $2.45 [3][7] Financial Performance - ALK's Q3 2025 adjusted EPS is negatively impacted by higher fuel costs and operational issues, including a July IT outage and weather-related disruptions [4][19] - The Zacks Consensus Estimate for Q3 2025 earnings has been revised downward by 26.2% over the past 60 days [4][5] - Despite the challenges, ALK has solid revenue trends, with unit revenues expected to be near the high end of prior guidance [20] Industry Context - Other airlines, such as Delta Air Lines (DAL) and JetBlue Airways Corporation (JBLU), have also updated their Q3 2025 guidance, with DAL projecting revenue growth of 2-4% and JBLU expecting a slight increase in available seat miles [8][10] - ALK's stock has shown strong performance over the past three months, outperforming the Zacks Airline industry and its peers [12] - From a valuation perspective, ALK is trading at a discount compared to the industry, with a forward 12-month price-to-sales ratio of 0.45X versus 0.56X for the industry [15][16] Investment Outlook - The current earnings expectations for ALK are weighed down by operational issues and higher fuel costs, suggesting it may not be an opportune time to buy [19] - The stock's attractive valuation and solid revenue trends indicate potential for future growth, but investors are advised to wait for a better entry point [20][21]