Allegiant Travel Co. :ALGT-US: Earnings Analysis: Q3, 2016 By the Numbers : November 9, 2016

Allegiant Travel Co. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Allegiant Travel Co. – SkyWest, Inc, Southwest Airlines Co., Alaska Air Group, Inc., JetBlue Airways Corporation, Delta Air Lines, Inc., Hawaiian Holdings, Inc., Republic Airways Holdings, Inc., Spirit Airlines, Inc., United Continental Holdings, Inc. and American Airlines Group, Inc. (SKYW-US, LUV-US, ALK-US, JBLU-US, DAL-US, HA-US, RJETQ-US, SAVE-US, UAL-US and AAL-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 333.23 million, Net Earnings of USD 45.16 million.
  • Gross margins narrowed from 31.90% to 31.70% compared to the same period last year, operating (EBITDA) margins now 30.75% from 33.76%.
  • Year-on-year change in operating cash flow of 41.04% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2015-09-30 2015-12-31 2016-03-31 2016-06-30 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 299.7 310.89 348.32 344.61 333.23
Revenue Growth (%YOY) 13.08 11.45 5.95 7.08 11.19
Earnings (mil) 44.26 56.55 71.61 60.56 45.16
Earnings Growth (%YOY) 214.29 1010.98 10.99 12 2.02
Net Margin (%) 14.77 18.19 20.56 17.57 13.55
EPS 2.62 3.37 4.29 3.68 2.75
Return on Equity (%) 53.63 66.13 80.41 62.99 42.55
Return on Assets (%) 13.51 17.04 20.78 16.99 12.11

Access our Ratings and Scores for Allegiant Travel Co.


Market Share Versus Profits

Revenues History
Earnings History

ALGT-US‘s change in revenue this period compared to the same period last year of 11.19% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that ALGT-US is holding onto its market share. Also, for comparison purposes, revenues changed by -3.30% and earnings by -25.44% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus


Earnings Growth Analysis

The company’s earnings rose year-on-year. But this growth has not come as a result of improvement in gross margins or any cost control activities in its operations. Gross margins went from 31.70% to 31.90% for the same period last year, while operating margins (EBITDA margins) went from 30.75% to 33.76% over the same time frame.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost


Cash Versus Earnings – Sustainable Performance?

ALGT-US‘s change in operating cash flow of 41.04% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


Margins

Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Allegiant Travel Co.


Company Profile

Allegiant Travel Co. engages in the provision of travel services. It includes scheduled service air transportation; air-related travel services and product; third party travel products, and fixed fee contract air transportation. The company was founded in May 2005 and is headquartered in Las Vegas, NV.

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