It has been about a month since the last earnings report for Allegiant Travel (ALGT Quick QuoteALGT - Free Report) . Shares have lost about 5.4% in that time frame, underperforming the S&P 500.

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

Allegiant Q2 Earnings Beat Estimates

Allegiant reported second-quarter 2021 earnings (excluding $2.03 from non-recurring items) of $3.46 per share, beating the Zacks Consensus Estimate of $2.96. Sentiments regarding air-travel demand are bullish now (due to increased inoculation programs) than the year-ago quarter’s levels, when the company reported a loss of $5.96 per share.

Operating revenues of $472.4 million, however, missed the Zacks Consensus Estimate marginally ($472.9 million) but increased more than 100% on a year-over-year basis.

Quarter in Details

Passenger revenues, which accounted for bulk (93.9%) of the top line, surged more than 100% on a year-over-year basis. The upside reflects on improvement in air-travel demand.

Air traffic (measured in revenue passenger miles or RPMs) for scheduled service surged 187.9% in the quarter under review. Capacity (measured in available seat miles or ASMs) also increased 107.2% year over year. Consequently, load factor (percentage of seats filled by passengers) widened 1990 basis points to 70.8% in the reported quarter as traffic surge outweighed capacity expansion.

Operating cost per available seat miles (CASM) excluding fuel declined 50.6% year over year. Average fuel cost per gallon (scheduled) surged 86.1% to $2.01 in the quarter. Moreover, total scheduled service passenger revenue per available seat miles (TRASM) rose 80.2% to 10.36 cents. The carrier exited the quarter with a fleet size of 103. The same is expected to end to 108 by the year-end.

Liquidity

As of Jun 30, 2021, Allegiant Travel’s total unrestricted cash and investments totaled $1,185.8 million compared with $685.3 million at the end of December 2020. Long-term debt and finance lease obligations (net of current maturities and related costs) came in at $1,441.1 million, almost flat from 2020-end levels.

Q3 Expectations

For the third quarter, ASM (for scheduled service as well as total system) are expected to increase between 16% and 20% from third-quarter 2019 figures.

Total operating revenues are expected to go up 3.5-7.5% from third-quarter 2019 actuals.

Fuel cost per gallon is expected to be at $2.11.

Unchanged 2021 Expectations

For 2021, aircraft, engines and induction costs are kept unchanged from its previous expectation of $115-$125 million.

Capitalized airbus deferred heavy maintenance is kept unchanged from its previous expectation of $50-$60 million.

Other capital expenditures are still expected between $40 million to $50 million.

Interest expenses are still expected in the range of $65-$70 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -15.37% due to these changes.

VGM Scores

Currently, Allegiant Travel has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Outlook

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