Alaska Airlines, the wholly owned subsidiary of Alaska Air Group, Inc. ( ALK ), is scheduled to report its fourth-quarter 2014 financial numbers before the opening bell on Jan 22.
Why a Likely Positive Surprise?
Our proven model shows that Alaska Air Group is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +3.41%. This is because the Most Accurate estimate stands at 91 cents, whereas the Zacks Consensus Estimate is pegged lower at 88 cents. This serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Alaska Air Group currently has a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
The combination of Alaska Air Group's Zacks Rank #2 and +3.41% ESP makes us reasonably confident in looking forward to a positive earnings beat.
What is Driving the Better-Than-Expected Earnings?
Recently, Alaska Air Group struck a five-year labor contract with its 3,400 flight attendants. The deal will allow the carrier to avoid work stoppages or strikes, thereby enhancing flight operations.
The company has also initiated new seasonal flights which will further boost traveling in popular holiday destinations. Moreover, declining fuel prices coupled with an improving cost structure will further add to the carrier's profits while moving ahead.
Other Stocks to Consider
Here are other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
Delta Air Lines Inc. ( DAL ) with an earnings ESP of +2.67% and a Zacks Rank #1.
Allegiant Travel Company ( ALGT ) with an earnings ESP of +24.09% and a Zacks Rank #1
Kansas City Southern ( KSU ) with an earnings ESP of +1.63% and a Zacks Rank #3.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.