Here's Why Investors Should Avoid Alaska Air Group Stock for Now

Alaska Air Group ALK is facing significant challenges from rising operating expenses and a deteriorating liquidity position, which are adversely affecting the company’s bottom line and making it an unattractive choice for investors’ portfolios.Let’s delve deeper.ALK: Key Risks to WatchSouthward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has moved 46.6% south in the past 60 days. For the next year, the consensus mark for earnings has been revised 38.8% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.Image Source: Zacks Investment ResearchUnimpressive Price Performance: Alaska shares have declined 21.4% year to date compared with the industry’s 0.4% fall.Image Source: Zacks Investment ResearchWeak Zacks Rank: ALK currently carries a Zacks Rank #5 (Strong Sell).Bearish Industry Rank: The industry to which ALK belongs currently has a Zacks Industry Rank of 138 (out of 246). Such an unfavorable rank places it in the bottom 44% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.Headwinds: Alaska Air Group is under increasing pressure on its bottom line due to rising expenses, which are challenging its financial stability. In the first quarter of 2025, the company’s operating expenses continue to remain at an elevated level. The total operating expenses increased 39% year over year. This rise was largely driven by higher labor costs and elevated maintenance expenses.Labor costs, comprising salaries and benefits, accounted for 33.8% and rose 40% year over year. Maintenance expenses increased 80% on a year-over-year basis. The company is now grappling with the impact of these escalating costs, which are putting additional strain on its profitability and overall financial health.Moreover, a downward trend was observed in ALK’s current ratio from 0.98 in 2021 to 0.61 in 2024. Further, in the first quarter of 2025, the current ratio was pegged at 0.58. This, indeed, is concerning as it questions the company’s ability to meet its short-term obligations.Stocks to ConsiderInvestors interested in the Transportation sector may also consider Copa Holdings CPA and Ryanair RYAAY.CPA currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.CPA has an expected earnings growth rate of 14.3% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 5.5%. Shares of CPA have risen 22.6% year to date.RYAAY currently sports a Zacks Rank of 1.RYAAY has an expected earnings growth rate of 30.5% for the current year. The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering an average beat of 46.6%. Shares of RYAAY have rallied 27.5% year to date.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ryanair Holdings PLC (RYAAY): Free Stock Analysis Report Copa Holdings, S.A. (CPA): Free Stock Analysis Report Alaska Air Group, Inc. (ALK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks