Shares of Allegiant Travel Company (ALGT Quick QuoteALGT - Free Report) have not had a good time on the bourses of late, declining in double digits so far this year. The disappointing price performance resulted in ALGT underperforming its industry in the said time frame. Additionally, ALGT’s price performance is unfavorable to that of other industry players like Southwest Airlines Co. (LUV Quick QuoteLUV - Free Report) ) and Ryanair Holdings (RYAAY Quick QuoteRYAAY - Free Report) in the same timeframe.

YTD Price Comparison

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Given the significant pullback in ALGT’s shares currently, investors might be tempted to snap up the stock. But is this the right time to buy ALGT? Let’s find out.

Headwinds Weighing on ALGT Stock

Allegiant is being hurt by the tariff-induced challenging macroeconomic backdrop. The ongoing economic uncertainties and the resultant reduction in consumer and corporate confidence have the potential to hurt domestic air travel demand. 

Production delays at Boeing,due toquality control checks and regulatory reviews by the Federal Aviation Administration, have been hurting the fleet-related plans of most airline companies, and it is no different for ALGT. Delays in aircraft delivery will lead to lower profitability than expected from the addition of these aircraft to ALGT’s existing fleet. Further, ALGT will be burdened with increased maintenance costs for those aircraft that would have otherwise been retired and raised interest costs for funds borrowed for pre-delivery deposits. Delivery delays are also expected to limit capacity growth going forward.

Labor costs have been moving up of late. Labor cost increase of 19.2% in 2024 (up 24.5% in 2023) swamped the 20.3% increase in total operating expenses in 2024, despite costs on aircraft fuel decreasing year over year (down 9.8% in 2024 and down 14.6% in 2023). This was followed by a 6.4% rise in operating expenses during the first nine months of 2025 (despite aircraft fuel expense down 1% year over year). The increase was attributable to deals inked with various labor groups. ALGT expects to continue experiencing increased cost pressure from the labor agreements. 

What Do Earnings Estimates Say for ALGT?

Concurrent with its third-quarter 2025 earnings release, ALGT announced it had raised its full-year earnings guidance. For 2025, adjusted consolidated earnings per share (EPS) are now expected to be above $3.00 (prior view: above $2.25). Adjusted EPS (airline) is now anticipated to be above $4.35 (prior view: above $3.25). The Zacks Consensus Estimate is currently pegged at $3.04 per share for 2025.

The positive sentiment surrounding the stock is evident from the fact that the Zacks Consensus Estimate for ALGT’s fourth-quarter and full-year 2025 earnings has been raised in the past 60 days.

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Tailwinds Working in Favor of ALGT

Improvement in air-travel demand, following the end of the pandemic and normalization of economic activities, bodes well for Allegiant's top line. With people taking to the skies, ALGT’s top line increased 3.5% on a year-over-year basis during the first nine months of 2025, owing to a 3.9% rise in passenger revenues, which accounted for the bulk (88.6%) of the top line. Given this encouraging backdrop, for the fourth quarter of 2025, capacity (measured in available seat miles or ASMs) (for scheduled service) is expected to increase 10% on a year-over-year basis. Total system ASM is projected to gain 9.5% on a year-over-year basis. Fourth-quarter adjusted operating margin is expected to lie between 10% and 12%.

Allegiant's fleet-modernization initiatives to cater to the increased travel demand are encouraging. The inclusion of modern planes in its fleet and the retirement of the old ones align with its environmentally friendly approach. ALGT ended 2024 with 125 (34 A319, 87 A320 and four 737-8200) planes in its fleet. ALGT ended third-quarter 2025 with 121 (29 A319, 82 A320 and 10 Boeing 737-8200) planes. The company aims to have a fleet size of 123 by the end of 2025.

ALGT’s liquidity position looks encouraging. The airline ended third-quarter 2025 with cash and cash equivalents of $985.32 million, higher than the current debt level of $270.63 million. This implies that the company has sufficient cash to meet its current debt obligations. 

A strong balance sheet enables the company to reward shareholders with dividends and share repurchases. As a reflection of its shareholder-friendly stance, ALGT paid out dividends worth $21.9 million and repurchased shares worth $6 million in 2024. During the first nine months of 2025, ALGT repurchased shares worth $12.95 million (did not pay any dividends). Such shareholder-friendly initiatives should boost investor confidence and positively impact the bottom line.

Impressive Valuation Picture for ALGT Stock

From a valuation perspective, ALGT is trading at a discount compared to the industry, going by its trailing 12-month price-to-book (P/B)ratio. The reading is also below its median over the last five years. The company has a Value Score of A.

ALGT P/B Ratio (trailing 12 months) Vs. Industry

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To Conclude

It is understood that ALGT stock is attractively valued, and strong passenger volumes bode well for Allegiant. Efforts to modernize its fleet are praiseworthy as well. Despite these positives, we advise investors not to buy ALGT stock now due to headwinds like high labor costs, Boeing and Airbus-related delivery delays and share price volatility. ALGT is also hurt by tariff-induced economic uncertainties and the resultant reduction in consumer and corporate confidence.

We advise investors to wait for a better entry point. For those who already own the stock, it will be prudent to stay invested. The company’s current Zacks Rank #3 (Hold) justifies our analysis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.