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Allegiant (ALGT) Rides on Air Travel Demand, Cost Woes Stay
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Allegiant Travel Company’s (ALGT - Free Report) top line is benefiting from continued recovery in air-travel demand (mainly on the leisure front).
The company recently reported first-quarter 2023 earnings of $3.04 per share, surpassing the Zacks Consensus Estimate of $2.29. The company had reported a loss in the year-ago reported quarter. Operating revenues of $649.7 million beat the Zacks Consensus Estimate of $628.2 million and increased 29.9% on a year-over-year basis.
Allegiant Travel Company Price, Consensus and EPS Surprise
Allegiant's operating revenues in first-quarter 2023 grew 29.9% on a year-over-year basis. Passenger revenues, which accounted for 93.7% of the top line, increased around 31.3% on a year-over-year basis. An upbeat in air-travel demand can be correlated with such an increase.
Further, Allegiant's fleet modernization efforts are also encouraging. The carrier operates an all-Airbus fleet. Allegiant's fleet size at 2019-end was 91 (37 A319 and 54 A320), up from the 2018 reported figure. Despite coronavirus-related woes, the fleet size increased to 95 in 2020. ALGT exited 2022 with 121 (35 A319 and 86 A320) planes in its fleet. Fleet size at the end of 2023 is expected to expand to 127.
ALGT has a strong cash position. Cash and cash equivalents of $317.6 million at the end of the first quarter of 2023 was higher than the current debt figure of $289.7 million. This implies that the company has enough cash to meet its debt burden.
Despite the aforementioned tailwinds, escalating fuel prices continue to remain a concern. In the first quarter of 2023, the average fuel cost per gallon (scheduled) shot up 13.6% to $3.42. For 2023, fuel cost per gallon is now expected to be $3.00 (prior view: $3.60). Although fuel price expectations have lowered for the full year, expenses due to fuel prices continue to bother.
For 2023, under Airline capex, aircraft, engines, induction costs and pre-delivery deposits are still expected in the $550-$570 million range. Capitalized deferred heavy maintenance is expected in the range of $50-$60 million. Other airline capital expenditures are expected between $130 million and $150 million.
Zacks Rank & Other Stocks to Consider
Allegiant currently carries a Zacks Rank #2 (Buy).
Copa Holdings has an expected earnings growth rate of 52.54% for the current year. CPA delivered a trailing four-quarter earnings surprise of 33.35%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 14.6% over the past 90 days. Shares of CPA have soared 39.9% over the past six months.
United Airlines has an expected earnings growth rate of more than 100% for the current year. UAL delivered a trailing four-quarter earnings surprise of 9.14%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved 14.6% over the past 90 days. Shares of UAL have soared 4.2% over the past six months.
Alaska Air has an expected earnings growth rate of 44.83% for the current year. The Zacks Consensus Estimate for ALK’s current-year earnings has improved 9.1% over the past 90 days. ALK has a long-term expected growth rate of 24.23%.
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Allegiant (ALGT) Rides on Air Travel Demand, Cost Woes Stay
Allegiant Travel Company’s (ALGT - Free Report) top line is benefiting from continued recovery in air-travel demand (mainly on the leisure front).
The company recently reported first-quarter 2023 earnings of $3.04 per share, surpassing the Zacks Consensus Estimate of $2.29. The company had reported a loss in the year-ago reported quarter. Operating revenues of $649.7 million beat the Zacks Consensus Estimate of $628.2 million and increased 29.9% on a year-over-year basis.
Allegiant Travel Company Price, Consensus and EPS Surprise
Allegiant Travel Company price-consensus-eps-surprise-chart | Allegiant Travel Company Quote
How is Allegiant Doing?
Allegiant's operating revenues in first-quarter 2023 grew 29.9% on a year-over-year basis. Passenger revenues, which accounted for 93.7% of the top line, increased around 31.3% on a year-over-year basis. An upbeat in air-travel demand can be correlated with such an increase.
Further, Allegiant's fleet modernization efforts are also encouraging. The carrier operates an all-Airbus fleet. Allegiant's fleet size at 2019-end was 91 (37 A319 and 54 A320), up from the 2018 reported figure. Despite coronavirus-related woes, the fleet size increased to 95 in 2020. ALGT exited 2022 with 121 (35 A319 and 86 A320) planes in its fleet. Fleet size at the end of 2023 is expected to expand to 127.
ALGT has a strong cash position. Cash and cash equivalents of $317.6 million at the end of the first quarter of 2023 was higher than the current debt figure of $289.7 million. This implies that the company has enough cash to meet its debt burden.
Despite the aforementioned tailwinds, escalating fuel prices continue to remain a concern. In the first quarter of 2023, the average fuel cost per gallon (scheduled) shot up 13.6% to $3.42. For 2023, fuel cost per gallon is now expected to be $3.00 (prior view: $3.60). Although fuel price expectations have lowered for the full year, expenses due to fuel prices continue to bother.
For 2023, under Airline capex, aircraft, engines, induction costs and pre-delivery deposits are still expected in the $550-$570 million range. Capitalized deferred heavy maintenance is expected in the range of $50-$60 million. Other airline capital expenditures are expected between $130 million and $150 million.
Zacks Rank & Other Stocks to Consider
Allegiant currently carries a Zacks Rank #2 (Buy).
Investors interested in other top-ranked stocks from the Zacks Transportation sector can consider Copa Holdings, S.A. (CPA - Free Report) , United Airlines (UAL - Free Report) and Alaska Air Group, Inc. (ALK - Free Report) . Copa Holdings and United Airlines currently sport a Zacks Rank #1 (Strong Buy), while Alaska Air carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings has an expected earnings growth rate of 52.54% for the current year. CPA delivered a trailing four-quarter earnings surprise of 33.35%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 14.6% over the past 90 days. Shares of CPA have soared 39.9% over the past six months.
United Airlines has an expected earnings growth rate of more than 100% for the current year. UAL delivered a trailing four-quarter earnings surprise of 9.14%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved 14.6% over the past 90 days. Shares of UAL have soared 4.2% over the past six months.
Alaska Air has an expected earnings growth rate of 44.83% for the current year. The Zacks Consensus Estimate for ALK’s current-year earnings has improved 9.1% over the past 90 days. ALK has a long-term expected growth rate of 24.23%.