Is It Time To Consider Buying Allegiant Travel Company (NASDAQ: ALGT)?
Allegiant Travel Company (NASDAQ: ALGT), may not be a large cap stock, but its share price has risen double-digit by more than 10% in the past two months on the NASDAQGS. With many analysts covering midcap stocks, we can expect any price sensitive announcement to have factored into the share price already. However, could the stock still trade for a relatively cheap price? Let’s take a look at Allegiant Travel’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What is the opportunity in Allegiant Travel?
The stock price looks reasonable at the moment based on my multiple price model, where I compare the company’s price-to-earnings ratio to the industry average. In this case, I used the price-to-earnings (PE) ratio since there isn’t enough information to reliably forecast the stock’s cash flow. I find that Allegiant Travel’s ratio of 29.95x trades in line with the ratio of its industry peers, which means if you buy Allegiant Travel today, you’d be paying a relatively reasonable price for it. Although there may be an opportunity to buy in the future. This is because Allegiant Travel’s beta (a measure of stock price volatility) is high, which means its price movements will be inflated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall more than the rest of the market, providing a prime buying opportunity.
What does the future of Allegiant Travel look like?
NasdaqGS: ALGT Profits and Revenue Growth December 12, 2021
Future prospects are an important aspect when considering buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a large business with a solid outlook for a cheap price is always a good investment, so let’s also take a look at the future expectations of the business. With profits expected to more than double over the next two years, the future looks bright for Allegiant Travel. It appears that a higher cash flow is expected for the stock, which should translate into a higher valuation of the stock.
What this means for you:
Are you a shareholder? ALGT’s bullish future growth appears to have been factored into the current stock price, with stocks trading around industry price multiples. However, there are also other important factors that we did not consider today, such as the financial strength of the company. Have these factors changed since the last time you consulted ALGT? Will you be confident enough to invest in the business if the price drops below the industry PE ratio?
Are you a potential investor? If you’ve been keeping your eye on ALGT, this might not be the best time to buy, given that it trades around industry price multiples. However, optimistic forecasts are encouraging for ALGT, which means that it is worth taking a closer look at other factors such as the strength of its balance sheet, in order to profit from the next price drop.
If you are interested in learning more about Allegiant Travel as a business, it is important to be aware of the risks it faces. Every business has risks, and we have spotted 3 warning signs for Allegiant Travel you should know.
If you are no longer interested in Allegiant Travel, you can use our free platform to see our list of more 50 other stocks with strong growth potential.
Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.