Alaska Air Group Has a Clear Runway for Earnings Momentum

Alaska Air Group (ALK) is acting like a stock the market wants to own again. After spending much of the past year well below its 52-week high of $78.08, shares have started to put together a more constructive tape - and the latest session was a clean example. The stock closed at $51.80 on 01/27/2026, up 3.43% on the day, and it did it with volume that came in well above the recent baseline.

My thesis is straightforward: ALK’s earnings outlook is getting more attractive at the same time the stock is regaining technical momentum. When you combine (1) improving sentiment around 2026 airline conditions, (2) a fleet story that is clearly aimed at efficiency and network reach, and (3) a chart that is finally back above key moving averages, you get a trade idea that’s actionable without needing heroic assumptions.

This is not a “set it and forget it” airline investment. Airlines are cyclical, cost-sensitive, and headline-prone. But as a trade, ALK has a clean risk-defined setup right now.

Trade stance: Long ALK on continuation strength, targeting a move back toward the mid-$60s as earnings expectations improve into 2026.

What Alaska Air Group actually is (and why the market cares)

Alaska Air Group is a holding company in U.S. air transportation, operating across three segments: Alaska Airlines, Hawaiian Airlines, and Regional. In plain English, it’s a scaled domestic carrier with a meaningful West Coast footprint, plus Hawaiian-branded operations and regional flying handled through Horizon and other partners under capacity purchase agreements.

Why does the market care? Because for airlines, the earnings story is almost always about a few core drivers:

• Capacity discipline (how much the industry adds seats)
• Demand quality (premium demand vs. bargain-fare churn)
• Cost control (fuel, labor, maintenance, aircraft ownership)
• Fleet efficiency and reliability (newer planes can lower unit costs and support network expansion)

Right now, ALK is benefiting from a market narrative that 2026 could be a better earnings year for airlines because capacity growth is expected to be limited and premium demand remains strong. That matters because the fastest way for airline margins to get wrecked is when the industry gets undisciplined and competes fares down. The latest Street commentary we have points in the opposite direction.

The numbers that matter right now

Let’s anchor on what the market is paying and what the business is producing.

A few observations that shape the trade:

• The stock is not expensive on enterprise metrics. EV/EBITDA at 6.11x is not a “bubble” multiple, especially if 2026 earnings expectations keep firming.
• The equity multiple looks high because earnings per share are currently modest. EPS is listed at $1.30, which makes the P/E (38.36x) look optically rich for an airline. If earnings ramp, that headline P/E can compress fast.
• Balance sheet and liquidity are not perfect. Debt-to-equity is 1.26, and current ratio is 0.52 (quick ratio 0.48). Airlines can live with these numbers, but it means the market can punish the stock quickly if demand softens or costs spike.
• Cash generation needs to improve. Free cash flow shows at -$54M, which is not what you want to see if you’re trying to argue “this is a cheap compounder.” For our purposes, it reinforces that this is a trade idea built around earnings momentum and re-rating, not a forever-hold thesis.

Technicals: the chart is finally helping, not hurting

ALK is not just drifting higher. It’s pushing above its trend measures:

• 10-day SMA: $49.32
• 20-day SMA: $49.76
• 50-day SMA: $47.78
• 9-day EMA: $49.93
• RSI: 57.91 (not overbought, but clearly improved)
• MACD: bullish momentum (histogram positive)

Price at $51.80 is above all of those key levels, and the day’s range ($50.04 low to $52.32 high) shows buyers defended dips and pressed the upside.

Volume matters too. Today’s volume was 5,387,634 shares versus a 30-day average volume around 3,182,952 and a 2-week average around 3,928,216. That’s not subtle. When a stock breaks higher on above-average volume, it increases the odds the move has sponsorship.

Why the “earnings outlook” angle is credible

The cleanest support here is the shift in industry tone. A Bank of America airline outlook note (published 01/06/2026) raised Alaska Air Group’s price target to $70 on a more constructive 2026 setup driven by limited capacity growth and strong premium demand.

I don’t treat any single bank note as gospel, but it’s useful confirmation that (a) the conversation is moving in a better direction, and (b) $70 is not an insane number in the market’s imagination. Remember, ALK traded as high as $78.08 within the last 52 weeks. We’re not trying to invent a new valuation regime - we’re trying to capture a normalization move if earnings expectations firm up.

There’s also a tangible fleet narrative in the headlines. Alaska’s major aircraft purchase deal with Boeing includes more than 105 Boeing 737-10 jets and five Boeing 787 Dreamliners, described as the company’s biggest plane order ever (reported 01/07/2026). A big order can cut two ways (capex and execution risk versus efficiency gains), but strategically it signals management is planning for a larger, more efficient operation, not a defensive crouch.

Valuation framing: what are you paying for ALK at $51.80?

At roughly a $6.01B market cap, ALK is priced like a company the market still doesn’t fully trust. That skepticism shows up in the depressed price-to-sales ratio (0.41x) and only moderate price-to-book (about 1.43x). It also shows up in the fact that ALK is still far below its 52-week high, even after today’s push.

Here’s the nuance: airlines can look “cheap” for a long time and still be value traps. So rather than argue ALK is fundamentally mispriced in some academic sense, I’d frame it like this: if the market grows more confident in 2026 earnings durability, ALK has room to re-rate, and the chart suggests that process may already be starting.

Enterprise value is about $10.03B, and EV/EBITDA at 6.11x is a workable base for a bullish trade. If EBITDA expectations rise, the multiple can stay steady while the stock moves higher. If the multiple expands even modestly with improved sentiment, you get additional torque.

Short interest: not extreme, but supportive

Short interest as of 12/31/2025 was 7,365,381 shares, with days to cover around 3.47. That’s not “squeeze me” territory, but it’s enough that a sustained uptrend can create incremental buying pressure as shorts reduce exposure. Recent short volume has also been meaningful (for example, 1,031,243 shares short on 01/26/2026 out of 2,004,596 total volume), suggesting there’s still an active skeptic camp.

Catalysts (what could push the trade)

• Continued positive 2026 airline outlook. If the limited-capacity-growth narrative holds, fare pressure stays rational and earnings estimates tend to drift higher.
• Follow-through from the Boeing fleet headlines. The market can start to price in efficiency and network optionality (especially with 787s in the mix).
• Technical continuation. A stock reclaiming and holding above its 20-day and 50-day averages often attracts systematic and momentum buyers.
• Multiple normalization. If EBITDA expectations firm, EV/EBITDA can support a higher equity value even without dramatic multiple expansion.

Trade plan (actionable)

I want this as a mid-term trade because the setup is improving, but it may need a few weeks for analyst narrative, price action, and positioning to line up. That gives the move room to breathe without marrying the position.

• Direction: Long
• Entry: $51.80
• Target: $64.50
• Stop loss: $47.70
• Horizon: mid term (45 trading days)

Why these levels? The stop is set just below the 50-day SMA ($47.78). If ALK loses that level, the “trend is improving” thesis is probably wrong, and you don’t want to hang around hoping. The target at $64.50 aims for a meaningful reversion toward prior trading territory while staying below the $70 figure floated in the bullish sell-side framing. In other words: take the high-probability part of the move, not the heroic part.

Risks and counterarguments (read these like you mean it)

• Liquidity and balance sheet pressure. A current ratio of 0.52 and quick ratio of 0.48 means ALK doesn’t have a lot of short-term cushion. If demand wobbles, the equity can react quickly.
• Free cash flow is negative. With free cash flow at -$54M, the market can challenge the quality of earnings, especially if capex ramps.
• Debt load adds sensitivity. Debt-to-equity at 1.26 can be manageable in good times and painful in bad ones. If rates or refinancing conditions tighten, the stock can get clipped.
• Aircraft delivery and execution risk. The big Boeing order is strategically exciting, but any delivery delays, certification issues, or fleet transition hiccups can hit capacity plans and costs.
• Airline demand and pricing can flip fast. Even with a constructive 2026 outlook, one weak travel season or a capacity surge from competitors can pressure yields and margins.

Counterargument to the thesis: The market may be right to keep ALK’s valuation capped because profitability metrics aren’t strong today (ROA 0.75%, ROE 3.72%), and the stock’s headline P/E still looks elevated versus what investors typically want to pay for an airline. In that view, today’s rally is just a bounce inside a choppy, range-bound business - not the start of a durable re-rating.

Conclusion: attractive setup, but keep it disciplined

ALK at $51.80 offers an appealing mix of improving momentum and a more constructive earnings narrative heading into 2026. The stock is reclaiming its moving averages with bullish MACD momentum, volume is picking up, and the broader airline outlook is turning less combative on capacity and more supportive on premium demand. That’s usually when airline stocks can move quicker than people expect.

I like this as a mid term (45 trading days) long trade with a tight invalidation point below the 50-day trend. I’d change my mind if ALK loses the $47.70 stop area (trend failure) or if the stock starts making higher volatility moves on heavy selling volume, which would signal the market is fading the earnings narrative instead of embracing it.