Alaska Air vs American Airlines Which Is a Smarter Choice?

Alaska Air and American Airlines are two major players in the airline industry, each with their own unique strengths and characteristics. Alaska Air, known for its focus on customer service and operational efficiency, has seen steady growth in recent years. On the other hand, American Airlines, with its extensive route network and large fleet, has faced challenges such as rising fuel costs and labor disputes. Investors looking to enter the airline sector may find these two stocks offer distinct opportunities and risks.

Alaska Air or American Airlines?

When comparing Alaska Air and American Airlines, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Alaska Air and American Airlines.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Alaska Air has a dividend yield of -%, while American Airlines has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Alaska Air reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, American Airlines reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Alaska Air P/E ratio at 24.85 and American Airlines's P/E ratio at 41.21. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Alaska Air P/B ratio is 1.79 while American Airlines's P/B ratio is -2.33.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Alaska Air has seen a 5-year revenue growth of 0.22%, while American Airlines's is -0.16%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Alaska Air's ROE at 7.67% and American Airlines's ROE at -5.42%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $63.10 for Alaska Air and $17.23 for American Airlines. Over the past year, Alaska Air's prices ranged from $32.62 to $65.62, with a yearly change of 101.16%. American Airlines's prices fluctuated between $9.07 and $18.20, with a yearly change of 100.66%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.