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Allegiant Travel (ALGT) Down 6.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Allegiant Travel (ALGT - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Allegiant Travel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Allegiant Misses on Q2 Earnings

The company’s total earnings of $4.33 per share lagged the Zacks Consensus Estimate of $4.67. However, the bottom line increased almost 40% year over year. Meanwhile, total operating revenues increased 12.6% year over year to $491.8 million on the back of a 12.1% rise in passenger revenues. However, the top line missed the consensus mark of $505.2 million.

Notably, quarterly earnings (airline operations) increased 49.8% year over year to $4.81 per share. Airline revenues increased 12% to $486.8 million.

Quarter in Details

Systemwide air traffic (measured in revenue passenger miles: RPMs) in the quarter under review rose 11.5% and capacity (measured in available seat miles: ASMs) increased 13.4% year over year. Consequently, load factor (percentage of seats filled by passengers) was 82.2%, down 130 basis points, as capacity expansion outweighed traffic growth.

Airline operating cost per available seat miles (CASM) excluding fuel fell 6.1%. Moreover, total scheduled service passenger revenue per available seat miles (TRASM) declined 1.6% to 10.97 cents. Average fuel cost per gallon (scheduled) decreased 6.3% to $2.22 in the quarter.

In the quarter under review, Allegiant rewarded shareholders with dividends worth $11 million. Furthermore, the board of directors has cleared a dividend of 70 cents per share, which is payable on Sep 27, 2019 to shareholders of record as of Sep 20.

Full-Year 2019 Outlook

The company expects scheduled and system ASMs to increase between 8% and 9% each. The company now expects non-fuel unit costs (airline) to decline between 3% and 4% (earlier outlook had hinted at a decline in the 1.5-3.5% range).

The company now expects fuel cost per gallon of $2.15 (earlier guidance: $2.26). Additionally, effective tax rate is now anticipated between 23% and 24%.

The company now expects earnings per share in the range of $13.50-$14.25 (earlier guidance: $13.25-$14.75) for the current year.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 12.59% due to these changes.

VGM Scores

At this time, Allegiant Travel has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Allegiant Travel has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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