Allegiant Travel (ALGT) Refreshes Its Fleet, Is The Stock Still Cheap?

Allegiant Travel (ALGT) has pushed ahead with its fleet refresh by introducing Boeing MAX jets and phasing out older Airbus aircraft, a shift that management expects will lower fuel and maintenance costs.

The new aircraft rollout lands at a tricky moment for Allegiant Travel shareholders. The share price is down 34.4% over the past 90 days and 23.9% year to date, yet the 1 year total shareholder return is still positive at 4.7%. This suggests recent weakness has interrupted earlier momentum rather than erased it.

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So is Allegiant Travel’s share slide pointing to real cracks in the business, or has sentiment simply swung harder than the fundamentals justify? And what does the current valuation say about that gap?

Most Popular Narrative: 43.4% Undervalued

On the most followed narrative, Allegiant Travel’s fair value sits at $118.43 compared with a last close of $66.98, which puts a big valuation gap front and center for anyone tracking the stock.

Recent and ongoing fleet modernization, specifically ramping up MAX aircraft to 20% of available seat miles by 2026 and retiring older, less efficient Airbus jets, should reduce fuel and maintenance costs, driving down CASM and improving net margins as operational efficiency and gauge increase, especially as utilization is strategically shifted toward peak periods.

See why 9 investors see Allegiant Travel as 43% undervalued.

Result: Fair Value of $118.43 (UNDERVALUED)

Still, the bullish Allegiant Travel narrative runs into two immediate hurdles: softer leisure demand around peak seasons and higher fuel and labor costs pressuring profitability.

Find out about the key risks to this Allegiant Travel narrative.

Next Steps

Sentiment around Allegiant Travel is clearly split, and that is exactly when doing your own homework matters most. Weigh both sides of the story and stress test your thesis against the 2 key rewards and 2 important warning signs.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an 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 account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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