It has been about a month since the last earnings report for Allegiant Travel Company (ALGT - Free Report) . Shares have added about 5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is ALGT 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.
Allegiant’s first-quarter earnings of $3.42 per share surpassed the Zacks Consensus Estimate of $3.00. Also, the bottom line improved significantly on a year-over-year basis. Results were aided by the strong demand for air travel.
Quarterly revenues increased in double-digits year over year to $425.4 million, marginally above the Zacks Consensus Estimate of $425.1 million. Moreover, the top line was boosted primarily by a significant increase (14.1%) in passenger revenues.
Systemwide air traffic (measured in revenue passenger miles) in the reported quarter rose 14.3% and capacity (measured in available seat miles) expanded 10.4% year over year. Load factor (percentage of seats filled by passengers) was 83%, up 280 basis points as capacity expansion was outweighed by traffic growth.
Cost per available seat miles (CASM) excluding fuel, decreased 2%. Total scheduled service revenue per available seat miles (TRASM) also inched up 1.4% to 11.30 cents.
TRASM in the quarter is expected to decrease by two percentage points driven by Easter, falling partly in the first quarter this time. High demand for air travel during Easter generates more passenger revenues and in turn, boosts unit revenues. Additionally, scheduled and system ASMs are anticipated to increase between 10% and 14%.
Revised 2018 Outlook
The company expects fuel cost per gallon of $$2.20 for the full year. The previous forecast for the metric was $2.17 per gallon. Additionally, effective tax rate is now anticipated between 21% and 22%. Earlier, the metric was estimated at 24-25%. This upside is owing to dissolution of foreign subsidiaries leading to adjustment of deferred tax balance. Capital expenditures are now projected at $300 million, higher than the earlier predicted $290 million.
The company continues to expect earnings per share in the band of $10-$12 for the current year. System capacity is likely to increase between 11% and 15%, unchanged from its past guidance.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been five revisions lower for the current quarter. Last month, the consensus estimate has shifted downward by 12.2% due to these changes.
Allegiant Travel Company Price and Consensus
At this time, ALGT has a nice Growth Score of B, however its Momentum is doing a bit better with an A. Following the exact same course, the stock was also 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and momentum investors than growth investors.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, ALGT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.