Is Allegiant Travel (ALGT) Likely To Beat On Earnings In Q2?
Zacks Investment Research | Jul 24, 2017 08:53AM ET
Allegiant Travel Company (NASDAQ:ALGT) is scheduled to report second-quarter earnings numbers on Jul 26, after the market closes.
Last quarter, the company saw a negative earnings surprise of 3.10%. However, it has an impressive earnings history, beating the Zacks Consensus Estimate in the other three preceding quarters. The average beat in the last four quarters was 1.89%.
Let’s see how things shape up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Allegiant is likely to beat on earnings this quarter, since it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP Filter .
Zacks Rank: Allegiant carries a Zacks Rank #2 (Buy).Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating estimates.
Conversely, all Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
Factors at Play
The company issued a bullish guidance with respect to total revenue per available seat miles (TRASM: a key measure of unit revenues) for the second quarter, while releasing its June traffic results. The metric is expected to grow in the band of 2.7-3.1%, up from its previous guidance of 1.5-3.5%. This significant increase in the lower end of the guidance is very encouraging. The positive sentiment surrounding the stock can be gauged from the fact that the Zacks Consensus Estimate for the quarter has moved up 6.1% in the last one month.
Additionally, we are impressed by Allegiant’s efforts to reward its shareholders. The company’s efforts to expand are also encouraging. To this end, in Jun 2017, the company announced 28 new routes from the U.S. cities namely, Gulfport, MS; Norfolk, VA and Milwaukee, WI. The flights will be available for as low as $29.
However, we remain mindful of the high labor costs, which might hurtthe bottom line in the second quarter.
Allegiant Travel Company Price and EPS Surprise
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