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Will Rising Costs Affect Allegiant's (ALGT) Q3 Earnings?
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Allegiant Travel Company (ALGT - Free Report) is scheduled to report third-quarter earnings numbers on Oct 25, after the market closes.
Last quarter, the company delivered a negative earnings surprise of 0.7%. The company’s earnings of $2.94 per share missed the Zacks Consensus Estimate by 2 cents. Also, 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.
Let’s see how things shape up for this announcement.
Factors at Play
The company’s third-quarter results are likely to be hampered by elevated costs. Similar to the previous quarter, high labor costs are expected to limit bottom-line growth in the third quarter as well. Cost per available seat mile excluding fuel (CASM-ex fuel) is expected to grow between 16.7% and 17.1%. The Zacks Consensus Estimate for the metric is pegged at 7.01 cents. High fuel costs are another cause for the company’s concern.
Also, decline in load factor (percentage of seats filled by passengers) is worrisome. The metric fell in three consecutive months namely, July, August and September due to capacity overexpansion. The fact that Allegiant is a highly leveraged company, further adds to its woes.
Driven by headwinds, shares of the company have underperformed the industry in the last three months. The stock has declined 3.1% against the industry’s 0.9% gain during the period.
The company expects total revenues per scheduled ASM (TRASM) for the third quarter in the range of 0.3-0.7% (previous guidance: -0.5-1.5%). Also, Fixed fee revenues and other revenues are predicted to be in the band of $22-$22.5 million (earlier view: $17-$19 million range).
The company’s efforts to reward shareholders through share buybacks and dividend payments are impressive. Its fleet modernization initiatives are appreciative as well.
Earnings Whispers
Per our proven model, a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. However, that is not the case as highlighted below.
Zacks ESP: Allegiant has an Earnings ESP of -4.76% as the Most Accurate estimate is pegged at $1.31 per share, lower than the Zacks Consensus Estimate of $1.37. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Allegiant carries a Zacks Rank #5 (Strong Sell).
We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Investors interested in the broader Transportation sector may consider Triton International Limited , Norfolk Southern Corporation (NSC - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) as these stocks comprise the right combination of elements to beat on earnings in their next releases.
Norfolk Southern has an Earnings ESP of +0.59% and carries a Zacks Rank of 3 as well. The company will report third-quarter 2017 results on Oct 25.
Expeditors is also #3 Ranked with an Earnings ESP of +1.68%. The company will report third-quarter 2017 financial numbers on Nov 7.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Will Rising Costs Affect Allegiant's (ALGT) Q3 Earnings?
Allegiant Travel Company (ALGT - Free Report) is scheduled to report third-quarter earnings numbers on Oct 25, after the market closes.
Last quarter, the company delivered a negative earnings surprise of 0.7%. The company’s earnings of $2.94 per share missed the Zacks Consensus Estimate by 2 cents. Also, 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.
Let’s see how things shape up for this announcement.
Factors at Play
The company’s third-quarter results are likely to be hampered by elevated costs. Similar to the previous quarter, high labor costs are expected to limit bottom-line growth in the third quarter as well. Cost per available seat mile excluding fuel (CASM-ex fuel) is expected to grow between 16.7% and 17.1%. The Zacks Consensus Estimate for the metric is pegged at 7.01 cents. High fuel costs are another cause for the company’s concern.
Also, decline in load factor (percentage of seats filled by passengers) is worrisome. The metric fell in three consecutive months namely, July, August and September due to capacity overexpansion. The fact that Allegiant is a highly leveraged company, further adds to its woes.
Driven by headwinds, shares of the company have underperformed the industry in the last three months. The stock has declined 3.1% against the industry’s 0.9% gain during the period.
The company expects total revenues per scheduled ASM (TRASM) for the third quarter in the range of 0.3-0.7% (previous guidance: -0.5-1.5%). Also, Fixed fee revenues and other revenues are predicted to be in the band of $22-$22.5 million (earlier view: $17-$19 million range).
The company’s efforts to reward shareholders through share buybacks and dividend payments are impressive. Its fleet modernization initiatives are appreciative as well.
Earnings Whispers
Per our proven model, a company needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. However, that is not the case as highlighted below.
Zacks ESP: Allegiant has an Earnings ESP of -4.76% as the Most Accurate estimate is pegged at $1.31 per share, lower than the Zacks Consensus Estimate of $1.37. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Allegiant carries a Zacks Rank #5 (Strong Sell).
We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Allegiant Travel Company Price and EPS Surprise
Allegiant Travel Company Price and EPS Surprise | Allegiant Travel Company Quote
Stocks to Consider
Investors interested in the broader Transportation sector may consider Triton International Limited , Norfolk Southern Corporation (NSC - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) as these stocks comprise the right combination of elements to beat on earnings in their next releases.
Triton International has an Earnings ESP of +2.04% and a Zacks Rank #3. The company is expected to report third-quarter earnings numbers on Nov 9. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Norfolk Southern has an Earnings ESP of +0.59% and carries a Zacks Rank of 3 as well. The company will report third-quarter 2017 results on Oct 25.
Expeditors is also #3 Ranked with an Earnings ESP of +1.68%. The company will report third-quarter 2017 financial numbers on Nov 7.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>