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Allegiant Travel (ALGT) Down 17.5% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Allegiant Travel Company (ALGT - Free Report) . Shares have lost about 17.5% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 Misses Q2 Earnings Estimates, Stock Falls

Allegiant’s second-quarter 2017 earnings of earnings of $2.94 per share missed the Zacks Consensus Estimate by $0.02. Moreover, earnings declined 20.11% from the year-ago figure due to higher costs.

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, the company paid $84 million to shareholders through a combination of dividends and buybacks.

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% in the second quarter aided by the shift of Easter into April.

Cost per available seat miles (CASM), excluding fuel, increased 13.2% in the reported quarter on the back of the labor deals inked by the company which led to a spike in labor costs.

Guidance

For the third quarter of 2017, the company expects the metric to grow 16–18%. The company expects 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. TRASM in the third quarter is expected in the band of -0.5%–1.5%.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been two revisions higher for the current quarter compared to three lower.

Allegiant Travel Company Price and Consensus

 

VGM Scores

At this time, the stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.




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