Allegiant Travel Company (NASDAQ:ALGT): Does -10.53% Earnings Drop In A Year Reflect The Long-Term Trend?
For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Allegiant Travel Company’s (NASDAQ:ALGT) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Allegiant Travel
Was ALGT’s recent earnings decline worse than the long-term trend and the industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to analyze different stocks on a more comparable basis, using new information. For Allegiant Travel, its most recent trailing-twelve-month earnings is US$194.90M, which, against the previous year’s figure, has declined by -10.53%. Since these values are fairly short-term, I’ve created an annualized five-year figure for Allegiant Travel’s earnings, which stands at US$124.55M This shows that although earnings growth was negative from the prior year, over a longer period of time, Allegiant Travel’s profits have been increasing on average.
What’s the driver of this growth? Let’s take a look at if it is merely owing to an industry uplift, or if Allegiant Travel has experienced some company-specific growth. In the past few years, Allegiant Travel grew its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the US airlines industry has been growing, albeit, at a unexciting single-digit rate of 2.02% over the prior year, and a substantial 15.56% over the last five years. This suggests that any near-term headwind the industry is enduring, it’s hitting Allegiant Travel harder than its peers.
What does this mean?
Allegiant Travel’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I recommend you continue to research Allegiant Travel to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for ALGT’s future growth? Take a look at our free research report of analyst consensus for ALGT’s outlook.
2. Financial Health: Is ALGT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
