The uptick in air-travel demand (particularly on the leisure front) bodes well for Allegiant Travel (ALGT - Free Report) . However, escalated fuel costs, a primary headwind, are limiting its bottom-line growth.
Factors Favoring ALGT
The gradual improvement in air-travel demand is a huge boon for Allegiant Travel, which currently carries a Zacks Rank #3 (Hold). In second-quarter 2022, air traffic (measured in revenue passenger miles or RPMs) for scheduled service surged 33.9%.
Owing to buoyant air-travel demand, ALGT carried 4.5% more passengers (systemwide) in July 2022 than a year ago. RPMs for scheduled flights increased 7.6% year over year in July. Scheduled service load factor (% of seats filled by passengers) increased 9.2 points to 90.5% in July.
With more and more people traveling again following the relaxation of COVID-related restrictions, Allegiant Travel carried 10.9% more passengers in July 2022 than the July 2019 (pre-coronavirus era) level. We are also impressed with ALGT’s efforts to modernize its fleet. The carrier operates an all-Airbus fleet. ALGT exited the June quarter with 115 planes in its fleet. Fleet size at the end of 2022 is expected to be 124.
Allegiant Travel’s liquidity position is also impressive. ALGT’s current ratio (a measure of liquidity) stood at a healthy 1.53 at the end of second-quarter 2022. A current ratio greater than 1.5 is usually considered good for a company. Moreover, ALGT's current ratio compared favorably with its industry’s average at the end of the June quarter.
A Key Risk
Escalating fuel costs pose a threat to Allegiant Travel’s bottom line. Oil price is moving north, primarily because of supply concerns stemming from Russia's invasion of Ukraine. In the second quarter of 2022, fuel price per gallon (adjusted) shot up in excess of 100% year over year to $4.33. Even though fuel price per gallon is expected to be much lower at $3.80 (mainly due to the increase in fuel gallons consumed as more flights are in operation owing to improved air-travel demand), it is higher than the third-quarter 2021 reported number of $2.20.
Stocks to Consider
Some better-ranked stocks in the Zacks Transportation sector are SkyWest (SKYW - Free Report) , GATX Corporation (GATX - Free Report) and C.H. Robinson (CHRW - Free Report) .
Continued recovery in air-travel demand bodes well for SkyWest. With better air-travel demand, SKYW carried 32.7% more passengers in first-half 2022 than the year-ago level. As a result, the passenger load factor (percentage of seats filled by passengers) expanded 1450 basis points to 82.1% in first-half 2022.
SKYW’s fleet-modernization efforts are commendable as well. The positivity surrounding the stock is evident from the Zacks Consensus Estimate for current-year earnings being revised above 100% upward over the past 60 days. SkyWest has a Momentum Style Score of B. SKYW currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Based in Chicago, IL, GATX is a global railcar lessor with owned fleets in North America, Europe and Asia. Improvement in the North American railcar leasing market is expected to continue driving its growth.
Shares of GATX have gained 6% in a year’s time. The Zacks Consensus Estimate for GATX’s 2022 earnings has been revised 2.1% upward in the past 60 days. GATX currently carries a Zacks Rank #2 (Buy).
C.H. Robinson is being aided by an improving freight scenario in the United States. Efforts to control costs also bode well. Measures to reward CHRW's shareholders instill confidence in the stock further.
CHRW has a pleasant earnings track record. The bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in the remaining one). The stock has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 17.6% upward over the past 60 days. C.H. Robinson currently carries a Zacks Rank of 2.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
The uptick in air-travel demand (particularly on the leisure front) bodes well for Allegiant Travel (ALGT - Free Report) . However, escalated fuel costs, a primary headwind, are limiting its bottom-line growth.
Factors Favoring ALGT
The gradual improvement in air-travel demand is a huge boon for Allegiant Travel, which currently carries a Zacks Rank #3 (Hold). In second-quarter 2022, air traffic (measured in revenue passenger miles or RPMs) for scheduled service surged 33.9%.
Owing to buoyant air-travel demand, ALGT carried 4.5% more passengers (systemwide) in July 2022 than a year ago. RPMs for scheduled flights increased 7.6% year over year in July. Scheduled service load factor (% of seats filled by passengers) increased 9.2 points to 90.5% in July.
With more and more people traveling again following the relaxation of COVID-related restrictions, Allegiant Travel carried 10.9% more passengers in July 2022 than the July 2019 (pre-coronavirus era) level. We are also impressed with ALGT’s efforts to modernize its fleet. The carrier operates an all-Airbus fleet. ALGT exited the June quarter with 115 planes in its fleet. Fleet size at the end of 2022 is expected to be 124.
Allegiant Travel’s liquidity position is also impressive. ALGT’s current ratio (a measure of liquidity) stood at a healthy 1.53 at the end of second-quarter 2022. A current ratio greater than 1.5 is usually considered good for a company. Moreover, ALGT's current ratio compared favorably with its industry’s average at the end of the June quarter.
A Key Risk
Escalating fuel costs pose a threat to Allegiant Travel’s bottom line. Oil price is moving north, primarily because of supply concerns stemming from Russia's invasion of Ukraine. In the second quarter of 2022, fuel price per gallon (adjusted) shot up in excess of 100% year over year to $4.33. Even though fuel price per gallon is expected to be much lower at $3.80 (mainly due to the increase in fuel gallons consumed as more flights are in operation owing to improved air-travel demand), it is higher than the third-quarter 2021 reported number of $2.20.
Stocks to Consider
Some better-ranked stocks in the Zacks Transportation sector are SkyWest (SKYW - Free Report) , GATX Corporation (GATX - Free Report) and C.H. Robinson (CHRW - Free Report) .
Continued recovery in air-travel demand bodes well for SkyWest. With better air-travel demand, SKYW carried 32.7% more passengers in first-half 2022 than the year-ago level. As a result, the passenger load factor (percentage of seats filled by passengers) expanded 1450 basis points to 82.1% in first-half 2022.
SKYW’s fleet-modernization efforts are commendable as well. The positivity surrounding the stock is evident from the Zacks Consensus Estimate for current-year earnings being revised above 100% upward over the past 60 days. SkyWest has a Momentum Style Score of B. SKYW currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Based in Chicago, IL, GATX is a global railcar lessor with owned fleets in North America, Europe and Asia. Improvement in the North American railcar leasing market is expected to continue driving its growth.
Shares of GATX have gained 6% in a year’s time. The Zacks Consensus Estimate for GATX’s 2022 earnings has been revised 2.1% upward in the past 60 days. GATX currently carries a Zacks Rank #2 (Buy).
C.H. Robinson is being aided by an improving freight scenario in the United States. Efforts to control costs also bode well. Measures to reward CHRW's shareholders instill confidence in the stock further.
CHRW has a pleasant earnings track record. The bottom line surpassed the Zacks Consensus Estimate in three of the trailing four quarters (missing the mark in the remaining one). The stock has witnessed the Zacks Consensus Estimate for 2022 earnings being revised 17.6% upward over the past 60 days. C.H. Robinson currently carries a Zacks Rank of 2.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on CHRW - FREE
Get the latest research report on ALGT - FREE
Get the latest research report on SKYW - FREE
Get the latest research report on GATX - FREE