Allegiant Travel (ALGT) Down 22.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Allegiant Travel (ALGT). Shares have lost about 22.8% 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.
Earnings Beat at Allegiant in Q2
Allegiant Travel reported second-quarter 2023 earnings (excluding 45 cents from non-recurring items) of $4.35 per share, surpassing the Zacks Consensus Estimate of $3.63. The company had reported earnings of 62 cents in the year-ago reported quarter. Operating revenues of $683.8 million beat the Zacks Consensus Estimate of $658.3 million and increased 3.9% on a year-over-year basis. Passenger revenues, which accounted for the bulk (94%) of the top line, increased by around 8.5% on a year-over-year basis. Upbeat air travel demand can be correlated with such an increase.
Management expects available seat miles or ASMs (for scheduled service) for 2023 to increase 0-3% on a year-over-year basis. Total system ASM is also expected to rise 0-3% on a year-over-year basis. Earnings per share (airline) are now expected in the $10.5-$13.00 (prior view: $9-$13) range. Fuel cost per gallon is expected to be $2.90 (prior view: $3). Interest expenses are now expected to be in the range of $145-$150 million (prior view: $150- $160 million).
For 2023, under airline capex, aircraft, engines, induction costs and pre-delivery deposits are now expected in the $490-$500 million range (prior view: $550-$570 million). Capitalized deferred heavy maintenance is expected to be in the range of $60-$70 million. Other airline capital expenditures are now expected to be between $140 million and $145 million (prior view: $130-$150 million). Total project spending (Sunseeker Resorts Project) for 2023 is still expected to be $695 million. The company expects to expand its fleet size to 127 at 2023-end.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -38.66% due to these changes.
VGM Scores
At this time, Allegiant Travel has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Allegiant Travel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Allegiant Travel belongs to the Zacks Transportation - Airline industry. Another stock from the same industry, SkyWest (SKYW), has gained 4.8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
SkyWest reported revenues of $725.64 million in the last reported quarter, representing a year-over-year change of -9.2%. EPS of $0.35 for the same period compares with $1.07 a year ago.
For the current quarter, SkyWest is expected to post earnings of $0.41 per share, indicating a change of -57.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +253.8% over the last 30 days.
SkyWest has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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