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A month has gone by since the last earnings report for Allegiant Travel (ALGT). Shares have lost about 5.3% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Allegiant Posts Wider-Than-Expected Q1 Loss
Allegiant incurred first-quarter 2021 loss (excluding $4.00 from non-recurring items) of $3.58 per share, wider than the Zacks Consensus Estimate of a loss of $3.17. Results were hurt by coronavirus-induced weakness in air-travel demand. However, sentiments were bullish in the year-ago quarter, when the company delivered earnings of $2.05 per share.
Moreover, operating revenues of $279.1 million plunged 31.8% year over year and missed the Zacks Consensus Estimate of $284.3 million. The downside was due to 32.3% fall in passenger revenues, which accounted for bulk (92%) of the top line.
Quarter in Details
Air traffic (measured in revenue passenger miles or RPMs) for scheduled service declined 25.9% in the quarter under review. Capacity (measured in available seat miles or ASMs) declined 1.1% year over year. Consequently, load factor (percentage of seats filled by passengers) deteriorated 1850 basis points to 55.3% in the reported quarter as traffic plunge outweighed capacity contraction.
Operating cost per available seat miles (CASM) excluding fuel dipped 60.3% year over year. Average fuel cost per gallon (scheduled) declined 0.5% to $1.86 in the quarter. Moreover, total scheduled service passenger revenue per available seat miles (TRASM) fell 30.8% to 6.89 cents.
As of Mar 31, 2021, Allegiant Travel’s unrestricted cash and investments totalled $301.6 million compared with $152.8 million at the end of December 2020. Long-term debt and finance lease obligations (net of current maturities and related costs) came in at $1,459.6 million, up 1.2% from 2020-end levels.
For the second quarter, ASM (for scheduled service as well as total system) are expected to increase between 2% to 6%, compared to second-quarter 2019 figures.
Scheduled service revenue (excluding fixed fee and other revenue) are expected to go down 6-10%, from second-quarter 2019 figures.
Fuel cost per gallon is expected to be at $1.99.
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 now expected between $40 million to $50 million (previous expectation: $20 million to $30 million).
Interest expenses are now expected in the range of $65-$70 million (previous expectation: $50-$55 million).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 249.59% due to these changes.
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. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Allegiant Travel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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