Alaska Air Group (Alaska Air Group) Predictability Rank

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What is Alaska Air Group Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Alaska Air Group Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

Alaska Air Group Predictability Rank Related Terms

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Alaska Air Group (Alaska Air Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Transportation » Alaska Air Group Inc (NYSE:ALK) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

ALK:Germany ALK:Germany

Address

19300 International Boulevard, Seattle, WA, USA, 98188

Website

https://www.alaskaair.com

Alaska Air Group Inc operates two airlines, Alaska and Horizon in three operating segments. The Mainline segment includes scheduled air transportation on Alaska's Boeing and Airbus jet aircraft for passengers and cargo throughout the U.S., and in parts of Mexico, and Costa Rica. The Regional segment includes Horizon's and other third-party carriers' scheduled air transportation for passengers across a shorter distance network within the U.S. and Canada under capacity purchase agreements (CPA). The Horizon segment includes the capacity sold to Alaska under a CPA. It earns revenues from Passenger tickets, including ticket breakage and net of taxes and fees, Passenger ancillary and Mileage Plan passenger revenue.

Executives

Benito Minicucci	officer: EXEC VP/OPS AND COO	C/O ALASKA AIRLINES, INC., 19300 INTERNATIONAL BLVD SO, SEATTLE WA 98188
Jason M Berry	officer: President, Horizon Air	C/O ALASKA AIR GROUP, INC., 19300 INTERNATIONAL BLVD., SEATTLE WA 98188
J Kenneth Thompson	director	ALASKA AIR GROUP, 19300 PACIFIC HIGHWAY SOUTH, SEATTLE WA 98188
Andrea L Schneider	officer: VP PEOPLE	ALASKA AIR GROUP, INC., 19300 INTERNATIONAL BLVD, SEATTLE WA 98188
Andrew R Harrison	officer: VP/PLNG & REV MGMT	C/O ALASKA AIR GROUP, INC., 19300 INTERNATIONAL BLVD, SEATTLE WA 98188
Shane R Tackett	officer: SR VP REV/E-COMMERCE	C/O ALASKA AIRLINES, INC., 19300 INTERNATIONAL BLVD, SEATTLE WA 98188
Dhiren R. Fonseca	director	C/O NORTHWEST RETAIL PARTNERS, LTD., 224 WESTLAKE AVE N, SUITE 500, SEATTLE WA 98109
Adrienne Rochelle Lofton	director	C/O ALASKA AIR GROUP, INC., 19300 INTERNATIONAL BLVD, SEATTLE WA 98188
Daniel Kevin Elwell	director	C/O ALASKA AIR GROUP, INC., 19300 INTERNATIONAL BLVD, SEATTLE WA 98188
Knight Jessie J Jr	director	4329 FOX BROOK LANE, CHARLOTTE NC 28211
Susan J Li	director	ALASKA AIR GROUP, INC., 19300 INTERNATIONAL BLVD, SEATTLE WA 98188
Helvi Kay Sandvik	director	C/O ALASKA AIR GROUP, INC., 19300 INTERNATIONAL BLVD, SEATTLE WA 98188
James A Beer	director	MCKESSON CORPORATION, ONE POST STREET, SAN FRANCISCO CA 94104
Raymond L. Conner	director	ALASKA AIR GROUP, INC., 19300 INTERNATIONAL BLVD, SEATTLE WA 98188
Kathleen T Hogan	director	C/O MICROSOFT CORPORATION, ONE MICROSOFT WAY, REDMOND WA 98052-6399