It has been about a month since the last earnings report for Allegiant Travel (
ALGT Quick Quote ALGT - Free Report) . Shares have added about 1.5% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Earnings Beat at Allegiant in Q4
Allegiant Travel reported fourth-quarter 2022 earnings (excluding 30 cents from non-recurring items) of $3.17 per share, surpassing the Zacks Consensus Estimate of 79 cents per share. The company had reported earnings of $1.18 per share a year ago. Operating revenues of $611.55 million beat the Zacks Consensus Estimate of $578.32 million and increased 23% on a year-over-year basis.
Passenger revenues, which accounted for the bulk (92.6%) of the top line, increased around 25% on a year-over-year basis. Upbeat air travel demand can be correlated with such an increase. Air traffic (measured in revenue passenger miles) for scheduled service increased 8.2% year over year in the quarter under review. Capacity (measured in available seat miles or ASMs) suffered a hit due to the the unfavorable weather condition and was down 2.2% from the year-ago reported figure. The load factor (percentage of seats filled by passengers) improved 8.2% to 85.3% in the reported quarter, as traffic surge outweighed capacity expansion. Operating cost per available seat miles (CASM), excluding fuel, increased 7.2% year over year to 7.76 cents. Average fuel cost per gallon (scheduled) surged 44.8% to $3.59. Total scheduled service passenger revenue per available seat miles (TRASM) improved to 14.03 cents from the year-ago reported 11.18 cents. Liquidity
As of Dec 31, 2022, Allegiant Travel’s total unrestricted cash and investments totaled $1,018.4 million compared with $1185.1 million at the end of December 2021. Long-term debt and finance lease obligations (net of current maturities and related costs) was $2097 million compared with $1,742.6 million reported at the end of 2021, accounting for an increase of 20.3%. Debt, net of unrestricted cash and investments, rose 93.5% on a year-over-year basis, resulting in elevated finance costs.
For 2023, ASM (for scheduled service) is expected to increase 2-6% on a year-over-year basis. Total system ASM is expected to rise 2-6% on a year-over-year basis. Earnings per share (airline) are expected in the $5.00-$9.00 range. Fuel cost per gallon is expected to be $3.60.
Interest expenses are expected in the range of $150-$160 million, up from 115.7 million in 2022. For 2023, under Airline capex, aircraft, engines, induction costs and pre-delivery deposits are expected in the $550-$570 million range. Capitalized deferred heavy maintenance is expected in the range of $50-$60 million. Other airline capital expenditures are expected between $130 million and $150 million. Total project spending (Sunseeker Resorts Project) for 2023 is expected to be $618 million. The company expects to expand its fleet size to 127 at 2023-end from 121 at the end of 2022. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 102.11% due to these changes.
At this time, Allegiant Travel has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been 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.
Performance of an Industry Player
Allegiant Travel belongs to the Zacks Transportation - Airline industry. Another stock from the same industry, Ryanair (
RYAAY Quick Quote RYAAY - Free Report) , has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Ryanair reported revenues of $2.36 billion in the last reported quarter, representing a year-over-year change of +40.4%. EPS of $0.95 for the same period compares with -$0.48 a year ago.
Ryanair is expected to post a loss of $1.05 per share for the current quarter, representing a year-over-year change of -7.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Ryanair has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.