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Why Is Allegiant Travel (ALGT) Up 39.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for Allegiant Travel (ALGT - Free Report) . Shares have added about 39.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Allegiant Travel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Allegiant  Reports Narrower-Than-Expected Loss in Q3

Allegiant incurred a third-quarter 2020 loss (excluding $2.46 from non-recurring items) of $4.28 per share, narrower than the Zacks Consensus Estimate of a loss of $4.81. Results were hurt by coronavirus-induced weakness in air-travel demand. However, sentiments were bullish in the year-ago quarter when the company delivered earnings of $2.70 per share on strong air-travel demand.

Moreover, operating revenues of $201 million plunged 54% year over year but surpassed the Zacks Consensus Estimate of $192.2 million. The downside was due to the 53.5% fall in passenger revenues, which accounted for bulk (90.5%) of the top line.

Quarter in Details

Air traffic (measured in revenue passenger miles or RPMs) for scheduled service declined 45.9% in the quarter under review. Capacity (measured in available seat miles or ASMs) dropped 6.5% year over year. Consequently, load factor (percentage of seats filled by passengers) deteriorated 3630 basis points to 49.7% in the reported quarter as traffic plunge outweighed capacity contraction.

Airline operating cost per available seat miles (CASM) excluding fuel dipped 22.5% year over year. Average fuel cost per gallon (scheduled) declined 39.2% to $1.32 in the quarter. Moreover, total scheduled service passenger revenue per available seat miles (TRASM) fell 49.5% to 5.60 cents.

Liquidity

As of Sep 30, 2020, Allegiant Travel’s unrestricted cash and investments totalled $709.8 million compared with $473.3 million at the end of December 2019. Long-term debt and finance lease obligations (net of current maturities and related costs) came at $1,316.2 million, up 5.4% from 2019 end.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 17.63% due to these changes.

VGM Scores

At this time, Allegiant Travel has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Allegiant Travel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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