TSC Ratings' Updates: Allegiant

The following ratings changes were generated on Tuesday, Jan. 20.

We've downgraded Allegiant Travel(ALGT Quote) from buy to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, we also find weaknesses including premium valuation, poor profit margins and weak operating cash flow.

Revenue rose by 35.4% since the year-ago quarter, outperforming the industry average of 7.9%, but earnings per share declined. Allegiants' 0.3 debt-to-equity ratio is low and below the industry average, implying successful management of debt levels, and its 1.3 quick ratio illustrates its ability to avoid short-term cash problems. Allegiant's gross profit margin of 18.7% is rather low, having decreased from the same quarter last year, but its net profit margin of 4.2% is above the industry average. ...