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Allegiant Travel (ALGT): A Beat in the Cards in Q3 Earnings?

Zacks Equity Research

Allegiant Travel Company ALGT, the parent company of Allegiant Air, is scheduled to report third-quarter 2016 results on Oct 26 after market closes.

Last quarter, the company posted a positive earnings surprise of 3.95%. The company has a solid track record with respect to earnings. It outpaced the Zacks Consensus Estimate in three of the last four quarters with an average earnings beat of 2.93%.

Factors to Consider

Allegiant Travel displayed a phenomenal year-over-year increase in traffic in Sep 2016. To be precise, the metric surged 31.4%. The company’s capacity too increased 33.4%. In the third quarter, traffic and capacity improved 18.3% and 20.2%, respectively. The number of passengers also increased in both September and the third quarter.

However, the company witnessed a decline in load factor in the third quarter as capacity increase outpaced traffic growth. Another matter of concern is the estimated decline in total revenue per scheduled available seat mile (TRASM) by 7.4–7.8% year over year in the third quarter. The company also faces tough competition from peers like Southwest Airlines Co. LUV and Delta Air Lines Inc. DAL.

Earnings Whispers

Our proven model shows that Allegiant Travel is likely to beat expectations this quarter because it has the right combination of two key ingredients.

Zacks ESP: Allegiant Travel has an Earnings ESP  of +1.53%. This is because the Most Accurate estimate stands at $2.66 and Zacks Consensus Estimate is pegged at $2.62.

Zacks Rank: Allegiant Travel carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings.

Conversely, we caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

ALLEGIANT TRAVL Price and EPS Surprise

 

ALLEGIANT TRAVL Price and EPS Surprise | ALLEGIANT TRAVL Quote

Stock to Consider

Here is a company you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter:

Navios Maritime Holdings Inc. NM, with an earnings ESP of +16.00% and a Zacks Rank #2. The company is expected to report third-quarter earnings on Nov 28. You can see the complete list of today’s Zacks #1 Rank stocks here.

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SOUTHWEST AIR (LUV): Free Stock Analysis Report
 
DELTA AIR LINES (DAL): Free Stock Analysis Report
 
ALLEGIANT TRAVL (ALGT): Free Stock Analysis Report
 
NAVIOS MARI HLD (NM): Free Stock Analysis Report
 
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