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Allegiant Travel (ALGT) Q4 Earnings: Is a Beat in Store?

We expect Las Vegas, NV-based, Allegiant Travel CompanyALGT , the parent company of Allegiant Air, to report better-than-expected earnings in the fourth quarter of 2016. The company will release its results on Jan 31, after the market closes .

The company has an impressive track record with respect to earnings, having outshined the Zacks Consensus Estimate in three of the last four quarters. The average earnings beat is 3.49%. In the third quarter of 2016, the company had registered a 3.38% positive earnings surprise.

The Allegiant Travel stock has gained over 12% since the third-quarter earnings beat. The stock has comfortably outpaced the Zacks categorized Transportation-Airline industry in the last three months. The stock returned 29.5% compared with the industry's gain of 16.4% over the same period.

The optimism regarding the stock ahead of its fourth-quarter earnings release can be gauged by the 4.3% increase in the Zacks Consensus Estimate over the last month.

Our quantitative model shows that Allegiant Travel is likely to beat earnings because it has the perfect combination of two key ingredients.

Zacks ESP: The Earnings ESP for Allegiant Travel is +0.83% with the Most Accurate estimate exceeding the Zacks Consensus Estimate of $2.40 per share by 2 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Allegiant Travel carries a Zacks Rank #3 (Hold). Please note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Allegiant Travel's Zacks Rank #3 and a positive ESP makes us reasonably confident of an earnings beat.

Allegiant Travel Company Price and EPS Surprise

Allegiant Travel Company Price and EPS Surprise | Allegiant Travel Company Quote

What is Driving the Better-than-Expected Earnings?

We are impressed by the company's efforts to expand. To attain this objective, the company continues to add new routes. For example, in the fourth quarter, it started operating flights to San Juan, Puerto Rico. Results in the fourth quarter are likely to be boosted by the holiday season travel rush. We are also impressed by its efforts to reward shareholders.

Buoyed by increased demand, the carrier said that, while revenue passenger miles (a measure of traffic: system wise) increased 10.9% in the fourth quarter (preliminary data), departures improved 19.2%. The carrier expects average fuel cost per gallon to be $1.73 in the fourth quarter.

The company expects total revenue per available seat mile (TRASM) to decline in the range of 4.3% to 4.7% in the fourth quarter. The bottom line is expected to be hurt due to increased labor costs associated with the pilots' agreement.

Stocks to Consider

Investors who are interested in the transportation space may also consider the following stocks. This is because our model shows that these companies too possess the right combination of elements to post an earnings beat this quarter.

Spirit AirlinesSAVE holds a Zacks Rank #2 and an Earnings ESP of +1.37%. It is scheduled to report fourth-quarter results on Feb 7. The company beat the Zacks Consensus Estimate in each of the last four quarters with an average positive surprise of 4.71%. You can see the complete list of today's Zacks #1 Rank stocks here.

C.H. Robinson WorldwideCHRW has a Zacks Rank #3 and an Earnings ESP of +2.38%. It is scheduled to report fourth-quarter results on Jan 31. The company beat the Zacks Consensus Estimate in two of the last four quarters.

Alaska Air GroupALK carries a Zacks Rank #2 and an Earnings ESP of +8.21%. It is scheduled to report fourth-quarter results on Feb 8. The company beat the Zacks Consensus Estimate in each of the last four quarters with an average positive surprise of 3.36%.

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Allegiant Travel Company (ALGT): Free Stock Analysis Report

Alaska Air Group, Inc. (ALK): Free Stock Analysis Report

C.H. Robinson Worldwide, Inc. (CHRW): Free Stock Analysis Report

Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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