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What's in Store for Allegiant (ALGT) This Earnings Season?

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Allegiant Travel Company (ALGT - Free Report) is scheduled to report third-quarter 2020 results on Oct 28, after market close.

Let’s take a look at the factors that are expected to have influenced the company’s third-quarter performance.

Low air travel demand due to COVID-19 is likely to have dented Allegiant’s third-quarter performance and hurt passenger revenues. The consensus estimate for passenger revenues suggests a decline 54.5% from the year-ago quarter’s reported number.  

To tackle low demand, the company resorted to capacity cuts. This measure was undertaken due to rise in government travel restrictions amid coronavirus concerns. The Zacks Consensus Estimate for capacity (measured in available seat miles) and traffic (measured in revenue passenger miles) for scheduled services reflects a 7.5% and 45.1% plunge from the year-ago quarter’s reported number, respectively. Since expected decline in traffic outweighs expected capacity contraction, load factor (% of seats filled by passengers) for scheduled services is likely to have declined in the to-be-reported quarter. Notably, the Zacks Consensus Estimate for load factor in the September quarter is currently pegged at 51%, which suggests a fall from 86% reported in the third quarter of 2019.

With coronavirus affecting demand significantly, low fuel prices are expected to have partly offset the adversities and contributed to the bottom line in the third quarter. The consensus mark for average fuel cost per gallon (for total system statistics) indicates 38.4% decline from the year-ago quarter’s reported figure.

Allegiant Travel Company Price and EPS Surprise

Allegiant Travel Company Price and EPS Surprise

Allegiant Travel Company price-eps-surprise | Allegiant Travel Company Quote

Earnings Whispers

Our proven model does not predict a bottom line outperformance for Allegiant this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise, which, however, is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Allegiant has an Earnings ESP of -0.85%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Allegiant carries a Zacks Rank #4 (Sell), currently.

Highlights of Q2

Allegiant’s loss of $5.96 per share (excluding 11 cents from non-recurring items) was wider than the Zacks Consensus Estimate of a loss of $4.53.  The company reported earnings of $4.33 per share in the year-ago quarter when air-travel demand was strong. Moreover, quarterly revenues of $133.3 million plunged 72.9% year over year but surpassed the Zacks Consensus Estimate of $125.9 million. The downtick was caused by 74.4% drop in passenger revenues.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Westinghouse Air Brake Technologies Corporation (WAB - Free Report) , United Parcel Service Inc (UPS - Free Report) and Schneider National Inc (SNDR - Free Report) as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Westinghouse Air Brake Technologies Corporation has an Earnings ESP of +1.29% and and a Zacks Rank #3. The company will release third-quarter 2020 results on Oct 29.

UPS has an Earnings ESP of +4.52% and a Zacks Rank #2. The company will announce third-quarter results on Oct 28.

Schneider has an Earnings ESP of +1.82% and a Zacks Rank of 2. The company will release third-quarter earnings on Oct 29.

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