Allegiant Travel(ALGT) ZACKS·2024-12-27 18:51Earnings and Financial Performance - Earnings per share (EPS) for the airline is anticipated to be in the $2.50-$3.00 range, up from the prior view of $0.50-$1.50 [2] - Fourth-quarter consolidated EPS, excluding special items, is expected to be in the range of $1.75-$2.25, an improvement from the prior expectation of breakeven to $1.00 per share [2] - The Zacks Consensus Estimate for EPS is currently pegged at $1.06 [2] - Total system ASM is projected to gain 1.9% year-over-year, up from the prior view of 1.5% [12] - Operating margin is expected to increase to the 13-14% range, up from the prior forecast of 6-8% [12] - Total revenues for 2024 are forecasted to decline in the range of 3.5-4.5%, an improvement from the prior view of a 4-5% decline [13] Air-Travel Demand and Revenue - Fourth-quarter revenue per available seat mile (RASM) is expected to increase 5.5%-7% year-over-year, up from the previous forecast of 3.5%-5.5% [7] - Upbeat air-travel demand is contributing to the company's top line [10] - Southwest Airlines (LUV), American Airlines (AAL), and JetBlue Airways (JBLU) have also provided encouraging fourth-quarter 2024 guidance due to upbeat holiday travel demand [17] - AAL lifted its fourth-quarter 2024 adjusted EPS guidance due to favorable pricing and revenue environment [23] - JBLU anticipates its fourth-quarter revenues to decline in the range of 2%-5% year-over-year [23] Fleet and Capacity - The company took delivery of two incremental 737-MAX aircraft in November and anticipates ending 2024 with four MAX aircraft in service, up from the prior expectation of one [18] - ALGT aims to expand its fleet size to 125 by the end of 2024, up from the prior view of 122 [18] - Fourth-quarter capacity (measured in available seat miles) for scheduled service is expected to increase 1.8% year-over-year, up from the prior expectation of 1.5% [22] Valuation and Stock Performance - ALGT is trading at a discount compared to the industry based on its forward 12-month price-to-sales ratio, which is also below its median over the last five years [9] - The company has a Value Score of A [9] - Shares of ALGT have improved in double-digits over the past 90 days, outperforming its industry [21] Costs and Expenses - Total operating expenses rose 10.2% year-over-year during the first nine months of 2024, following a 3.6% increase in 2023 [15] - The fuel cost per gallon is suggested to be $2.50, with the average fuel cost per gallon for November 2024 estimated at $2.52 [24] - Fourth-quarter CASM, excluding fuel and special charges, is anticipated to decline 3.5% year-over-year [8] Liquidity and Debt - ALGT's total unrestricted cash and investments were $804.6 million at the end of the third quarter of 2024, significantly lower than its long-term debt and finance lease obligations of $1.77 billion [5] Other Financial Activities - ALGT executed the sale of its underutilized CFM engines in the fourth quarter for $15 million [8]