Optimism Rises for Allegiant Travel Despite Three-Year Earnings Decline
July 6, 2023
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Allegiant Travel ($NASDAQ:ALGT) has experienced a three-year decline in profits, but optimism for the company’s future is on the rise. Allegiant is an American low-cost airline and travel company that primarily operates under the Allegiant Air brand name. It is the ninth-largest commercial airline in the United States, and provides both scheduled and charter air travel services. The company also offers vacation packages, hotel bookings, car rental services, and other related travel services. This rise in stock prices may be attributed to recent news that Allegiant Air will now begin offering flights to Hawaii.
Additionally, the airline has increased its presence in several major cities such as Las Vegas, Chicago, and Phoenix. This growth in service could be a sign of potential success for Allegiant Travel in the future. Overall, despite a decrease in profits over the past few years, optimism for Allegiant Travel is on the rise. With its expanded presence in various markets and new plans to launch flights to Hawaii, Allegiant Travel could be well-positioned for success in the years ahead.
Earnings
According to its FY2023 Q1 earnings report as of March 31 2021, the company earned 279.12M USD in total revenue and 6.87M USD in net income, representing a 44.2% decrease and 187.2% decrease respectively compared to the previous year. Despite this, Allegiant Travel has steadily increased its total revenue over the past three years from 279.12M USD to 649.69M USD. This significant growth in revenue has resulted in an optimistic outlook for the company’s future performance.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Allegiant Travel. More…
| Total Revenues | Net Income | Net Margin |
| 2.45k | 65.24 | 3.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Allegiant Travel. More…
| Operations | Investing | Financing |
| 303.05 | -491.42 | 33.12 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Allegiant Travel. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 4.51k | 2.11k | 68.99 |
Key Ratios Snapshot
Some of the financial key ratios for Allegiant Travel are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 10.9% | -13.5% | 8.4% |
| FCF Margin | ROE | ROA |
| -5.4% | 10.3% | 2.8% |
Market Price
On Wednesday, the stock opened at $128.2 and closed at $126.0, representing a 2.3% drop from its previous closing price of $129.0. The three-year decrease in earnings was largely attributed to rising fuel costs, higher labor expenses, and increased competition in the airline industry. Despite this decline, investors are beginning to show optimism in the company’s outlook, expecting Allegiant Travel to bounce back and resume increasing earnings. The recent opening and closing prices suggest that there is some market confidence in the company’s ability to return to profitability. Live Quote…
Analysis
GoodWhale recently conducted an analysis of ALLEGIANT TRAVEL‘s wellbeing. Our Star Chart rated ALLEGIANT TRAVEL with an intermediate health score of 6/10, indicating that they have the capacity to sustain future operations even in times of crisis. Furthermore, their performance across our other metrics suggested that they are strong in assets, medium in growth, profitability and weak in dividends. Based on this, we classified ALLEGIANT TRAVEL as a ‘rhino’, meaning that they have achieved moderate revenue or earnings growth. Given the performance and classification of ALLEGIANT TRAVEL, we suspect that investors looking for moderate growth would be interested in them. They have proven to be resilient and have the potential to deliver steady returns over time. Moreover, their cashflows and debt indicate that they are likely to remain stable throughout times of uncertainty. As such, we believe that ALLEGIANT TRAVEL could be a suitable option for investors seeking sustainable yet moderate returns. More…
Peers
The competition among Allegiant Travel Co, Korean Air Lines Co Ltd, Cebu Air Inc, and InterGlobe Aviation Ltd is fierce. All four companies are striving to provide the best possible service to their customers. Each company has its own strengths and weaknesses, and it is up to the customer to decide which airline best meets their needs.
– Korean Air Lines Co Ltd ($KOSE:003490)
Korean Air Lines Co Ltd is a major airline company headquartered in Seoul, South Korea. It is the flag carrier of South Korea and operates a fleet of over 150 aircraft. The company has a market cap of 7.89T as of 2022 and a Return on Equity of 20.57%. Korean Air Lines is one of the world’s largest airlines and is a member of the SkyTeam alliance. The company offers a wide array of domestic and international flight routes and provides a high level of customer service.
– Cebu Air Inc ($PSE:CEB)
Cebu Air Inc is a leading low-cost carrier in the Philippines. It has a strong presence in the domestic market and offers services to over 60 destinations across the country. The company has a market cap of 22.34B as of 2022 and a Return on Equity of -580.13%. Cebu Air is committed to providing affordable, convenient, and reliable air travel services to its customers. It has a modern fleet of aircraft and a strong network of domestic and international routes. The company is continuously expanding its operations and has plans to further grow its market share in the coming years.
– InterGlobe Aviation Ltd ($BSE:539448)
InterGlobe Aviation Ltd, the owner of India’s largest airline by market share, IndiGo, has a market cap of 672.27B as of 2022. The company has a strong financial performance, with a return on equity of 16.73%. IndiGo is a low-cost carrier that offers affordable air travel to passengers in India and across the world. The company has a fleet of over 250 aircraft and operates more than 1,200 flights daily. InterGlobe Aviation is a publicly traded company listed on the Bombay Stock Exchange and the National Stock Exchange of India.
Summary
Allegiant Travel has seen an uptick in investor optimism in the past week, despite a decrease in earnings over the last three years. The company’s stock has been climbing steadily in recent days, buoyed by strong earnings reports and upbeat outlooks from analysts. Despite the recent decline in earnings, Allegiant has been able to remain profitable through strategic cost-cutting and cost-saving measures.
Analysts cite good customer service and reliable operations as key factors keeping Allegiant profitable. Going forward, investors should look for additional cost savings measures and more effective marketing strategies as Allegiant looks to grow profits over the coming quarters.
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