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Allegiant Travel's (ALGT) Capacity & Load Factor Rise in May
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Capacity-related woes have been hurting Allegiant Travel Company (ALGT - Free Report) for quite some time. In fact, it is one of the factors behind the 3.4% decline in the company’s stock price so far this year.
The company’s May traffic report was no exception and showed substantial year-over-year rise in capacity.
Detailed Report
Traffic for the total system that includes scheduled service and fixed fee contract — measured in revenue passenger miles (RPMs) — increased 10.9% on a year-over-year basis to 1.06 billion. System capacity, calculated in available seat miles (ASMs), expanded 10.7% to 1.23 billion in the same month.
With traffic growth marginally outpacing capacity expansion, load factor (percentage of seats filled with passengers) registered a mere 20 basis points year-over-year increase to 82%. This Las Vegas-based carrier transported 1.14 billion passengers in May, reflecting an improvement of 11.8% on a year-over-year basis.
Although traffic increased on a year-over-year basis in May, the rise in the metric compared unfavorably to the comparable reading a month ago, when traffic was up 12%. Capacity expansion was more in this month compared with 9% in April, giving rise to capacity-overexpansion related fears. The reading for May load factor too compared unfavorably to 83.2% in April.
Other Headwinds
Apart from capacity-related woes, the stock is still suffering from CBS News' report, 60 Minutes, alleging that it was facing a number of safety-related issues. The damaging television program was aired on Apr 15. The allegations are being investigated.
Also, escalating fuel costs are hurting the company’s bottom-line performance. In the first quarter, fuel costs increased in excess of 20% year over year to $2.18 per gallon. The metric has risen further subsequently. While the reading was $2.28 per gallon in April, it increased even higher to $2.44 per gallon in May.
With oil prices on an uptrend, it will not be surprising if Allegiant Travel revises its current-year fuel price guidance of $2.20 per barrel upward in the near future.
Shares of GATX, SkyWest and Expeditors have rallied in excess of 11%, 47% and 37%, respectively, in a year’s time.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Allegiant Travel's (ALGT) Capacity & Load Factor Rise in May
Capacity-related woes have been hurting Allegiant Travel Company (ALGT - Free Report) for quite some time. In fact, it is one of the factors behind the 3.4% decline in the company’s stock price so far this year.
The company’s May traffic report was no exception and showed substantial year-over-year rise in capacity.
Detailed Report
Traffic for the total system that includes scheduled service and fixed fee contract — measured in revenue passenger miles (RPMs) — increased 10.9% on a year-over-year basis to 1.06 billion. System capacity, calculated in available seat miles (ASMs), expanded 10.7% to 1.23 billion in the same month.
With traffic growth marginally outpacing capacity expansion, load factor (percentage of seats filled with passengers) registered a mere 20 basis points year-over-year increase to 82%. This Las Vegas-based carrier transported 1.14 billion passengers in May, reflecting an improvement of 11.8% on a year-over-year basis.
Although traffic increased on a year-over-year basis in May, the rise in the metric compared unfavorably to the comparable reading a month ago, when traffic was up 12%. Capacity expansion was more in this month compared with 9% in April, giving rise to capacity-overexpansion related fears. The reading for May load factor too compared unfavorably to 83.2% in April.
Other Headwinds
Apart from capacity-related woes, the stock is still suffering from CBS News' report, 60 Minutes, alleging that it was facing a number of safety-related issues. The damaging television program was aired on Apr 15. The allegations are being investigated.
Also, escalating fuel costs are hurting the company’s bottom-line performance. In the first quarter, fuel costs increased in excess of 20% year over year to $2.18 per gallon. The metric has risen further subsequently. While the reading was $2.28 per gallon in April, it increased even higher to $2.44 per gallon in May.
With oil prices on an uptrend, it will not be surprising if Allegiant Travel revises its current-year fuel price guidance of $2.20 per barrel upward in the near future.
Zacks Rank & Stocks to Consider
Allegiant Travel has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are GATX Corporation (GATX - Free Report) , SkyWest Inc. (SKYW - Free Report) and Expeditors International of Washington, Inc. (EXPD - Free Report) . While GATX and SkyWest carry a Zacks Rank #2 (Buy), Expeditors sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of GATX, SkyWest and Expeditors have rallied in excess of 11%, 47% and 37%, respectively, in a year’s time.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>