Why Is Allegiant Travel (ALGT) Up 57% Since Last Earnings Report?

It has been about a month since the last earnings report for Allegiant Travel (ALGT). Shares have added about 57% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Allegiant Travel due for a pullback? 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.

Allegiant Beats on Q1 Earnings

Allegiant reported first-quarter 2020 earnings (excluding $4.13 from non-recurring items) of $2.05 per share, which surpassed the Zacks Consensus Estimate of 58 cents per share. However, the bottom line fell 48.5% year over year due to lower revenues stemming from falling demand for air travel. Quarterly revenues came in at $409.2 million, which beat the Zacks Consensus Estimate of $408.3 million. However, the top line declined 9.4% year over year on the back of a 9.8% fall in passenger revenues.

Notably, quarterly earnings (airline operations adjusted for tax) fell to $1.89 per share.

Quarter in Details

Air traffic (measured in revenue passenger miles or RPMs) for scheduled service fell 8.3% in the quarter under review. Capacity (measured in available seat miles or ASMs) increased 4.3% year over year. Load factor (percentage of seats filled by passengers) was 73.8%, down 1010 basis points as capacity expanded while traffic declined.

Airline operating cost per available seat miles (CASM) excluding fuel rose 1.7% year over year. Average fuel cost per gallon  (scheduled) declined 12.2% to $1.87 in the quarter. Moreover, total scheduled service passenger revenue per available seat miles (TRASM) fell 13.4% to 9.96 cents.

The company has suspended all share repurchase and dividends payouts due to the uncertain economic conditions stemming from the pandemic.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -11.9% due to these changes.

VGM Scores

At this time, Allegiant Travel has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. 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.

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