Allegiant Travel Co.
) delivered positive earnings surprises in four out of the last
five quarters, helping its stock price to soar more than 73% since
August 2011. This low-cost air travel operator recently reported
its 37th consecutive profitable quarter, buoyed by a
slowly-improving U.S. economy, higher passenger traffic and falling
Earnings estimates have been moving higher, making ALGT a Zacks #1
Rank (Strong Buy) stock on July 3, 2012. Given the long-term growth
projection of 28.4% and the recent announcement of large
second-quarter passenger traffic, Allegiant Travel is now an
attractive investment opportunity for aggressive growth investors.
Healthy First Quarter
On April 25, Allegiant Travel reported first quarter 2012 adjusted
net earnings of $1.13 per share, beating the Zacks Consensus
Estimate by 15.3% and the year-ago earnings by 27%. Total operating
revenue of $237.9 million surpassed the Zacks Consensus Estimate by
0.8% and increased 23.1% year over year.
EBITDA surged 28.1% from last year to approximately $48.3 million.
EBITDA margin was 20.3%, compared with 19.5% in the year-ago
quarter. Excluding fuel prices, operating expense per passenger
dropped 1.5% to $55.10.
Traffic Jumps in Q2
Recently, Allegiant Travel declared its preliminary passenger
traffic results for the second quarter. Total passenger traffic
managed by the company increased 15.1% year over year to 1,794,665.
Total revenue passenger miles were 1636.1 million, reflecting an
improvement of 16.7%. Total seat miles jumped 18.1% to 1862.3
million from 1576.8 million.
Estimates Revisions Climbing
The past month has seen five of 12 estimates for 2012 move higher,
lifting the Zacks Consensus Estimate by nearly 4% to $4.13. ALGT
has also watched four of 12 estimates advance for next year,
boosting the Zacks Consensus Estimate by about 2.3% to $5.31. This
suggests year-over-year profit improvement of more than 28% for
Allegiant Travel's current PEG ratio is 0.6, a 40% discount to the
benchmark of 1.0. However, on a forward P/E basis, the stock
currently trades at 17.08x, a 50.2% premium to the peer group
average of 11.37x. Allegiant Travel looks quite attractive given a
trailing 12-month ROE of 15.5%, which is 104% higher than the peer
group average of 7.6%.
The chart below shows a secular positive price movement since
August 2011, barring some minor pullbacks. The stock has been
consistently trading above its 50 and 200-days moving averages
since March 2012. The widening gap between the stock price line and
that of 50 and 200-days moving averages show the growth potential
of Allegiant Travel. Year-to-date, the stock has returned 32.3%,
significantly outpacing the benchmark S&P 500 return of a
little over 5%.
Las Vegas, Nevada headquartered Allegiant Travel Co. was founded in
1997. The company is an air travel operator linking travelers in
small cities to several leisure destinations, such as Las Vegas,
Orlando, Phoenix, Tampa/St. Petersburg, Los Angeles, and Ft.
Lauderdale. Allegiant Travel offers leisure tours both on a
standalone basis and bundled with hotel rooms, rental cars, and
other travel related services.
ALLEGIANT TRAVL (ALGT): Free Stock Analysis
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