Shares of Allegiant Travel Company (ALGT - Free Report) have performed disappointingly so far this year. The stock has declined 20.1% compared to its industry’s gain of 13.8% on a year-to-date basis.
In fact, the stock price received another blow after the company based in Las Vegas, NV, gave a lacklustre performance on the bottom-line front in the reported quarter. Notably, its earnings of $2.94 per share missed the Zacks Consensus Estimate by 2 cents. Moreover, earnings declined 20.11% from the year-ago figure due to higher costs. Consequently, this disappointed investors and shares started losing value. Evidently, the stock declined 7.93% on Jul 27 to close the day’s trading session at $131.85 per share.
Quarterly revenues, however, increased 16.2% year over year to $400.6 million, edging past the Zacks Consensus Estimate of $399.8 million. Network growth aided the top line. During the quarter, Allegiant paid $84 million to shareholders through a combination of dividends and buybacks. Moreover, its board of directors increased the share repurchase authorization to $100 million.
Air traffic (measured in revenue passenger miles) in the reported quarter rose 11% year over year and capacity (measured in available seat miles) grew 12.7%. Load factor (percentage of seats filled by passengers) was 82.6%, down 130 basis points, as capacity expansion outweighed travel growth. Total revenue per available seat miles (TRASM) improved 3.1% aided by the shift of Easter into April.
Cost per available seat miles (CASM), excluding fuel, increased 13.2% in the reported quarter driven by the labor deals inked by the company that led to a spike in labor costs. In fact, the new pilot agreement contributed to the increase in the metric.
For the third quarter of 2017, this Zacks Rank #3 (Hold) company expects the metric to grow 16–18%. In fact, Allegiant anticipates the increase in CASM to be primarily driven by the implementation of the new pilot agreement. The metric is still expected to increase in the band of 10% to 12% for full-year 2017. Also, TRASM for the third quarter is anticipated in the band of -0.5%–1.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Transportation space are keenly waiting for second-quarter earnings reports from key players like GOL Linhas (GOL - Free Report) , Copa Holdings, S.A. (CPA - Free Report) and Air Lease Corp. (AL - Free Report) . While GOL Linhas and Copa Holdings will report second-quarter results on Aug 9, Air Lease will report the same on Aug 3.
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