Should I rely on Allegiant Travel management in July 2024?

Buy low, sell high is the golden rule of investing, and Allegiant Travel (NASDAQ: ALGT) seems to be a promising opportunity to apply this rule. With a current valuation of $2.43B and a price to earnings ratio of 40.92X, the stock appears undervalued, especially when considering its forward PE of 14.49. The company's robust net income from continuing operations of $172M and operating income of $249.6M further underscore its financial health. Despite the industry's challenges, Allegiant has managed to maintain a low debt to equity ratio of 1.69%, and its retained earnings stand at a healthy $1.27B. The company's revenue per share is $140.44, and with a target price of $70.22, there is significant room for growth. However, investors should be aware of the company's probability of bankruptcy at 41.83%. Despite this, the company's strong financials and the anticipated rebound in the travel industry make Allegiant a promising investment opportunity. Many traders often overanalyze the passenger airlines sector, but it's worth considering Allegiant Travel. We will examine the recent price movements of Allegiant Travel, which suggest a potential bounce in July. Is the company's valuation justified? Let's delve into Allegiant Travel's valuation perspective to provide a clearer view on whether to invest in this stock.
Published over two weeks ago
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Reviewed by Rifka Kats

With a current valuation of $2.43B and a trailing PE of 16.20, Allegiant Travel (ALGT) presents a promising investment opportunity, especially considering its low Price to Book ratio of 0.74X. The company's robust EBITDA of $472.76M and positive Return on Assets of 2.42% further signal a potential rebound in July, making it an attractive stock for value investors.

Main Points

Allegiant Travel has liabilities of $2.36 billion, with a Debt to Equity (D/E) ratio of 1.69, which is average for similar companies. Its current ratio is 1.5, typical for the sector. Allegiant's use of debt should always be evaluated alongside its cash and equity. The company's asset utilization ratio is 50.87%, indicating it generates $0.51 for each dollar of assets. A rising asset utilization ratio suggests Allegiant Travel is becoming more efficient in using its assets for daily operations.
We determine the current worth of Allegiant Travel using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Allegiant Travel based exclusively on its fundamental and basic technical indicators. By analyzing Allegiant Travel's financials, quarterly and monthly indicators, and related drivers such as dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Allegiant Travel's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Allegiant Travel. We calculate exposure to Allegiant Travel's market risk, different technical and fundamental indicators, relevant financial multiples and ratios, and then comparing them to Allegiant Travel's related companies.

Allegiant Travel Investment Alerts

Allegiant investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Allegiant Travel performance across your portfolios.Please check all investment alerts for Allegiant

Allegiant Travel Valuation Ratios as Compared to Competition

Our valuation model uses many indicators to compare Allegiant value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Allegiant Travel competition to find correlations between indicators driving the intrinsic value of Allegiant.

Allegiant Travel Gross Profit

Allegiant Travel Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Allegiant Travel previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Allegiant Travel Gross Profit growth over the last 10 years. Please check Allegiant Travel's gross profit and other fundamental indicators for more details.

What is driving Allegiant Travel Investor Appetite?

Allegiant Travel reported the previous year's revenue of 2.51 B. Net Income was 113.41 M with profit before overhead, payroll, taxes, and interest of 494.21 M.

Margins Breakdown

Allegiant profit margins show the degree to which it makes money. Margin indicators are used not only by investors but also by creditors or Allegiant Travel itself as indicators of financial health and management effectiveness. Please look more closely at the different varieties of Allegiant Travel profit margins.
0.08
Operating Profit Margin
0.0775
Net Profit Margin
0.11
Pretax Profit Margin
Pretax Profit Margin0.11
Operating Profit Margin0.08
Net Profit Margin0.0775
Gross Profit Margin0.14
Allegiant Travel Price To Sales Ratio is decreasing over the last 8 years. The newest value of Allegiant Travel Price To Sales Ratio is 0.56.
Moreover, Allegiant Travel Market Cap is comparatively stable at the moment. Every cloud has a silver lining, and for Allegiant Travel (US Stocks: ALGT), the silver lining is a robust rebound anticipated in July. Despite a challenging market environment, Allegiant's strong fundamentals, including a net asset of $4.93 billion and a healthy current ratio of 1.53X, suggest a promising investment opportunity. The company's operating income stands at $249.6 million, with a profit margin of 0.02%, indicating its ability to generate profits despite the odds. Moreover, Allegiant's forward dividend yield of 0.0473 and a payout ratio of 0.4688 signal a commitment to returning value to shareholders. With a forward PE of 14.49, the stock appears reasonably valued, making it an attractive proposition for investors seeking to capitalize on the rebound in the travel sector..

Is Allegiant showing indication of lower volatility?

Allegiant Travel's latest variance of 8.19 suggests a potential decrease in stock volatility, indicating a tighter spread of returns and potentially greater stability. This could appeal to investors and traders seeking less risk. However, it's vital to consider other market factors and Allegiant's overall financial health before investing. Allegiant Travel's stock exhibits low volatility with a skewness of 0.22 and kurtosis of 0.86. Understanding market volatility trends can help investors time the market. Using volatility indicators correctly allows traders to measure Allegiant Travel's stock risk against market volatility during bullish and bearish trends.
The increased volatility of bear markets can directly affect Allegiant Travel's stock price and stress investors as they see their share values drop, often prompting portfolio rebalancing with different financial instruments.In conclusion, Allegiant Travel's stock presents a compelling investment opportunity. Despite the turbulence experienced in the travel industry, the company's valuation real value stands at $61.17, significantly higher than its current market value of $50.7. This suggests that the stock is undervalued and has the potential for considerable upside. The analyst overall consensus is a 'Buy', with the highest estimated target price reaching $112.89, further indicating room for growth. However, investors should also consider the possible downside price of $46.09. While there are risks involved, the potential for Allegiant Travel to bounce back is strong, making it a stock worth considering for those with a long-term investment horizon..

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nico Santiago do not own shares of Allegiant Travel. Please refer to our Terms of Use for any information regarding our disclosure principles.

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