Allegiant Travel Company (ALGT - Free Report) has been riding high on strong passenger revenues. The metric recorded revenues of $1.16 billion in the first nine months of 2018, reflecting a 12.3% increase year over year. High passenger revenues have in turn, helped the company generate top-line growth of 10.9% in the period. When compared with the year-ago period, the bottom line has also shown substantial improvement in the first nine months of the current year.
The company also has an impressive earnings history, having outperformed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 18.7%. We expect the company to perform well in fourth-quarter 2018as well on the back of high passenger revenues.
Allegiant’s measures to add shareholder value through dividends and share buybacks are also impressive. In the first nine months of 2018, Allegiant rewarded shareholders with dividend worth $33.9 million. As of Jul 25, 2018, the company has a share repurchase authorization of $100 million. These moves underscore the company’s sound financial position.
The company’s fleet modernization initiatives are a further positive. It aims to maintain an all-airbus fleet by this year-end. On this front, the company took delivery of its first US-produced Airbus A320 plane in May, 2018. It targets to drive efficiencies and enhance the flying experience of passengers by maintaining a single-fleet type. The new planes are equipped with all-modern facilities featuring an additional seating capacity and are more fuel-efficient. As part of its fleet modernization efforts, the carrier is not only adding new and more efficient planes but also retiring the old ones.
Moreover, Allegiant’s trailing 12-month return on equity (ROE) supports its growth potential. The company’s ROE of 26.8% compares favorably with its industry’s average of 22.6%, reflecting that it is adept in utilizing shareholders’ funds.
On the back of the above-mentioned tailwinds, the Zacks Consensus Estimate for current-quarter earnings has moved 3.6% north in the last 60 days. Also, the same for full-year earnings has risen by 2 cents. The company’s VGM Score of B further highlights the positivity surrounding the space.
The company’s Zacks Rank #2 (Buy) clearly suggests that the time is ripe for investors to add this stock to their portfolios. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Key Picks
Some other top-ranked stocks in the same space are Azul (AZUL - Free Report) , Air France-KLM (AFLYY - Free Report) and Spirit Airlines (SAVE - Free Report) , each flaunting a Zacks Rank #1.
Shares of Azul, Air France-KLM and Spirit Airlines have rallied more than 64%, 26% and 57%, respectively, in the past six months.
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