Is Alaska Air Group (ALK) Pricing Justified After Mixed Share Price Performance?

Wondering if Alaska Air Group at around US$49.66 is a bargain or fairly priced today? This article breaks down what the current valuation suggests. The stock is up 2.2% over the last week, though it is down 5.3% over 30 days, 3.6% year to date, and 26.3% over the past year, so recent moves may look quite different depending on your time frame. Recent coverage of Alaska Air Group has focused on its share price performance and how the stock compares with peers within the broader airline sector, giving investors additional context for these mixed return figures. This backdrop helps frame the question of whether the current price reflects caution, opportunity, or a combination of both. On our valuation checks, Alaska Air Group scores 1 out of 6, as shown in our valuation summary. Next, we will look at what different valuation methods suggest about that score and then finish with a more complete way of thinking about the stock’s value.

Alaska Air Group scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Alaska Air Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today using a required rate of return.

For Alaska Air Group, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in US$. The latest twelve month free cash flow is a loss of $452.1 million. Analysts provide explicit forecasts for the next few years, such as $426.0 million in 2026 and $368.2 million in 2027, with $195.3 million in 2028. Beyond that, Simply Wall St extrapolates free cash flow out to 2035, with discounted values ranging from about $384.0 million in 2026 down to $36.3 million in 2035.

When all these projected and extrapolated cash flows are discounted back to today, the model arrives at an estimated intrinsic value of about $14.85 per share. Compared with the current share price of around $49.66, that implies the stock is very expensive relative to this cash flow based estimate, with an implied overvaluation of about 234.4%.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Alaska Air Group may be overvalued by 234.4%. Discover 867 undervalued stocks or create your own screener to find better value opportunities.

ALK Discounted Cash Flow as at Jan 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Alaska Air Group.

Approach 2: Alaska Air Group Price vs Earnings

For profitable companies, the P/E ratio is a useful way to see how much investors are paying for each dollar of earnings. It connects the share price directly to the bottom line, which is usually what ultimately supports long term valuations.

What counts as a “normal” P/E depends on what the market expects from a company. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher perceived risk tends to support a lower P/E. That is why simple comparisons often only tell part of the story.

Alaska Air Group currently trades on a P/E of 38.40x, compared with an Airlines industry average of 9.24x and a peer average of 11.38x. Simply Wall St’s “Fair Ratio” for Alaska Air Group is 35.85x. This Fair Ratio is a proprietary estimate of what the P/E might be given factors such as earnings growth, profit margins, industry, market cap and company specific risks, so it goes further than a basic peer or sector comparison.

Since the current P/E of 38.40x is above the Fair Ratio of 35.85x by more than a small margin, this multiple based view points to the stock being overvalued.

Result: OVERVALUED

NYSE:ALK P/E Ratio as at Jan 2026

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Alaska Air Group Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives, where you set a story for Alaska Air Group, link that story to your own revenue, earnings and margin forecasts, arrive at a Fair Value, and then compare that Fair Value with the current price. Examples range from a more optimistic view that ties in with a Fair Value around US$80.00 to a more cautious view closer to US$56.00. These all update automatically as new news or earnings are added so you can quickly see whether your story still justifies holding, adding, or reducing your position.

Do you think there’s more to the story for Alaska Air Group? Head over to our Community to see what others are saying!

NYSE:ALK 1-Year Stock Price Chart

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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