The following ratings changes were generated on Tuesday, Dec. 9.
We've upgraded Allegiant Travel (ALGT) from hold to buy, driven by its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.
Revenue rose by 35.4% since the same quarter last year, outpacing the industry average of 7% growth, but earnings per share declined. Alegiant's current debt-to-equity ratio, 0.33, is low and is below the industry average, implying successful management of debt levels. The company also maintains an adequate quick ratio of 1.27, which illustrates the ability to avoid short-term cash problems. Net income has decreased by 30.3% since the same quarter a year ago, falling from $7.02 million to $4.89 million, outperforming the airlines industry average. EPS decline 29.4% in the most recent quarter compared with the same quarter a year ago. During the past fiscal year, Allegiant turned its bottom line around by earning $1.54 vs. -11 cents in the prior year. For the next year, the market is expecting a contraction of 9.1% in earnings to $1.40.
Shares are trading above where they were a year ago, outperforming the S&P 500 despite the company's weak earnings results. The stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV