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Allegiant (ALGT) Q2 Earnings Beat Estimates, Stock Up 2.25%

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·4 min read
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Allegiant Travel Company ALGT reported second-quarter 2021 earnings (excluding $2.03 from non-recurring items) of $3.46 per share, beating the Zacks Consensus Estimate of $2.96. Moreover, better-than-expected earnings impressed the market, as the stock price moved up 2.25%, since the date of earnings release on Jul 28. Sentiments regarding air-travel demand are bullish now (due to increased inoculation programs) than the year-ago quarter’s levels, when the company reported a loss of $5.96 per share.

Operating revenues of $472.4 million, however, missed the Zacks Consensus Estimate marginally ($472.9 million) but increased more than 100% on a year-over-year basis.

Allegiant Travel Company Price, Consensus and EPS Surprise

Allegiant Travel Company Price, Consensus and EPS Surprise
Allegiant Travel Company Price, Consensus and EPS Surprise

Allegiant Travel Company price-consensus-eps-surprise-chart | Allegiant Travel Company Quote

Quarter in Details

Passenger revenues, which accounted for bulk (93.9%) of the top line, surged more than 100% on a year-over-year basis. The upside reflects on improvement in air-travel demand.

Air traffic (measured in revenue passenger miles or RPMs) for scheduled service surged 187.9% in the quarter under review. Capacity (measured in available seat miles or ASMs) also increased 107.2% year over year. Consequently, load factor (percentage of seats filled by passengers) widened 1990 basis points to 70.8% in the reported quarter as traffic surge outweighed capacity expansion.

Operating cost per available seat miles (CASM) excluding fuel declined 50.6% year over year. Average fuel cost per gallon (scheduled) surged 86.1% to $2.01 in the quarter. Moreover, total scheduled service passenger revenue per available seat miles (TRASM) rose 80.2% to 10.36 cents. The carrier exited the quarter with a fleet size of 103. The same is expected to end to 108 by the year-end.

Liquidity

As of Jun 30, 2021, Allegiant Travel’s total unrestricted cash and investments totaled $1,185.8 million compared with $685.3 million at the end of December 2020. Long-term debt and finance lease obligations (net of current maturities and related costs) came in at $1,441.1 million, almost flat from 2020-end levels.

Q3 Expectations

For the third quarter, ASM (for scheduled service as well as total system) are expected to increase between 16% and 20% from third-quarter 2019 figures.

Total operating revenues are expected to go up 3.5-7.5% from third-quarter 2019 actuals.

Fuel cost per gallon is expected to be at $2.11.

Unchanged 2021 Expectations

For 2021, aircraft, engines and induction costs are kept unchanged from its previous expectation of $115-$125 million.

Capitalized airbus deferred heavy maintenance is kept unchanged from its previous expectation of $50-$60 million.

Other capital expenditures are still expected between $40 million to $50 million.

Interest expenses are still expected in the range of $65-$70 million.

Zacks Rank

Allegiant Travel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Sectorial Snapshot

Within the broader Transportation sector, Delta Air Lines DAL, J.B. Hunt Transport Services JBHT and Kansas City Southern KSU recently reported second-quarter 2021 results.

Delta, carrying a Zacks Rank #3, incurred a loss (excluding $2.09 from non-recurring items) of $1.07 per share was narrower than the Zacks Consensus Estimate of a loss of $1.41. Revenues of $7,126 million were, however, substantially higher than the year-ago quarer’s levels, buoyed by the recent uptick in air-travel demand. The metric also topped the Zacks Consensus Estimate of $6,340.9 million.

Kansas City Southern, carrying a Zacks Rank of 4(Sell), reported second-quarter 2021 earnings (excluding $6.23 from non-recurring items) of $2.06 per share missed the Zacks Consensus Estimate of $2.16. Quarterly revenues of $749.5 million surpassed the Zacks Consensus Estimate of $733.1 million and increased 36.8% year over year, driven by 31% rise in overall carload volumes.

J.B. Hunt, a Zacks #3-Ranked player, reported better-than-expected second-quarter 2021 results. Quarterly earnings of $1.61 per share surpassed the Zacks Consensus Estimate of $1.55. Total operating revenues of $2908.4 million outperformed the Zacks Consensus Estimate of $2722 million and also jumped 35.5% year over year.


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