ALLEGIANT TRAVEL COMPANY (ALGT): what the price requires

At today's price, ALLEGIANT TRAVEL COMPANY (ALGT) is priced for -4.8% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/ALGT

Headline

FieldValue
TickerALGT
CompanyALLEGIANT TRAVEL COMPANY
Current price$106.71/sh
CompositionAirline 98% / Sunseeker 2%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed4.9%
Operating margin (mid-cycle)14.6%
Margin compression implied-9.7pp
Trailing margin (depressed year)1.9%
Implied growth-4.8%
Multiple paid10x mid-cycle operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.00σ
cohort percentile (of 225 peers)6
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.97x3expensive
Earnings4.22x1expensive
Relative0.29x3justifies
Growth0.77x2justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.2%); the inversion above states its own rate.

Per-Model Detail (n=9)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$746.280.14xyesReference only (OCF-based, capex excluded): OCF $0.5B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$362.490.29xyesP/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$60.201.77xyesReference only (book value floor): BV/sh $60.20, ROE negative
Two-Stage Excess ReturnAsset$54.181.97xyesReference only (book value with convergence): BV/sh $60.20, ROE converges to ke
Discounted Future Market CapGrowth$76.761.39xyesRev $2.6B, growth 3% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.7x / 0.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$25.314.22xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.21B × (1−36%) / WACC 6.2% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$102.881.04xyesEBITDA $0.30B × sector EV/EBITDA 12.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$18.155.88xyesBV $60.20 × (ROIC 1.9% / WACC 6.2%)
P/Sales SectorRelative$362.490.29xyesRevenue $2.64B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$1.3b
Net debt / NOPAT (after-tax)5.13x
Net debt / operating income (pre-tax)3.30x
Share count CAGR (dilution)0.4%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 14.6%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Trailing earnings are cycle-depressed, so the price reads against mid-cycle margins, and even there the market is paying only about 10 times normalized operating income, below what a 5 percent annual profit decline would warrant.

The surprise is the turn already underway. First-quarter 2026 operating margin reached 14.9 percent, the best first quarter since the pandemic, on a 16.4 percent jump in unit revenue and a near 20 percent rise in average base fare.

Allegiant sold the money-losing Sunseeker resort in September 2025 and is now a re-focused leisure airline, with a pending Sun Country acquisition adding both opportunity and integration risk.

Bull Case

The counterintuitive finding is that an airline the market still treats as a broken story is, on its own normalized economics, priced below what the models can floor. Trailing earnings are depressed, so the price is read against Allegiant's own through-the-cycle margins, near 14.6 percent, and even on that basis the market pays only about 10 times mid-cycle operating income, a multiple so low it sits below what even a 5 percent annual decline in operating profit would warrant. For a profitable, recovering carrier, that is the kind of valuation usually reserved for a business in terminal decline, and Allegiant is not in decline.

The recovery is already showing in the numbers, which is the second surprise. First-quarter 2026 net income rose to $42.5 million on $732.4 million of revenue, with the adjusted operating margin reaching 14.9 percent, more than a five-point improvement year over year and the highest first quarter since the pandemic. Unit revenue rose 16.4 percent and the scheduled-service average base fare climbed 19.8 percent, evidence of genuine leisure-demand strength and pricing power in Allegiant's small-city, point-to-point network where it often faces no direct competition. The filing also notes results were helped "by the decrease in average fuel prices year over year" (FY2025 10-K, accession 0001362468-26-000008), so lower input costs are amplifying the fare gains.

The most important strategic surprise is what the company stopped doing. Allegiant sold the Sunseeker Resort on September 4, 2025, and the filing confirms resort revenue fell "primarily due to the sale of Sunseeker Reso"rt (same filing). That divestiture removes a capital-hungry, loss-making distraction and returns Allegiant to a pure-play leisure airline. At the same time it is integrating new 737 MAX aircraft, with nine added to the fleet, which lower unit costs, and it has a pending acquisition of Sun Country that could extend the model. A re-focused, recovering ULCC with improving margins, fleet modernization, and a price below the model floor is a value setup hiding in plain sight.

Bear Case

The structural truth a holder would rather not face is that this is an airline, and airlines are among the worst businesses in public markets: capital-intensive, fuel-exposed, cyclical, and unable to control their largest cost or their demand. The low multiple is not a free lunch; it is the market's standing discount for an industry that periodically destroys the capital it earns in good years. Allegiant carries roughly $1.29 billion of net debt against mid-cycle operating income, with interest coverage near 3.5 times, so the balance sheet has real leverage going into any downturn. The 14.9 percent first-quarter margin was helped by lower fuel; that tailwind reverses when fuel rises, and the filing warns that fuel availability "is subject to periods of market surplus and shortage" and that meteorological events can disrupt supply, all factors "we have no control" over (FY2025 10-K, accession 0001362468-26-000008).

The demand side is purely discretionary. Allegiant flies leisure travelers to vacation destinations, the first spending people cut when budgets tighten, so a consumer slowdown hits both load factors and fares at once. The same pricing power that drove the 19.8 percent base-fare increase can evaporate in a soft travel year, and a small-city network concentrates the risk if regional demand weakens.

The Sun Country acquisition is the new structural complication. Buying another airline introduces integration risk, fleet and labor complexity, and capital commitment at exactly the moment Allegiant has just simplified by exiting Sunseeker. Airline mergers are notoriously difficult, and a leveraged carrier taking on an acquisition while its margin recovery is only a few quarters old is adding execution risk to a business that already has too many uncontrollable variables. The price may look cheap on mid-cycle margins, but mid-cycle assumes the cycle cooperates; if fuel spikes, if leisure demand softens, or if the Sun Country integration stumbles, the normalized earnings the valuation leans on may not show up, and a leveraged airline at the trough of confidence can stay cheap for a long time.

Valuation

Trailing earnings are depressed by the cycle, with a trailing operating margin near 2 percent, so the price is read against Allegiant's own through-the-cycle margins, near 14.6 percent mid-cycle, rather than the trough. On that basis the market is paying only about 10 times normalized operating income, a multiple so low that the price sits below what even a 5 percent annual decline in operating profit would warrant. This is a bound rather than a solved point: the price embeds operating profit that falls, not one that holds, which is a pessimistic assumption for a carrier whose margins are recovering. The relative-multiple and forward-growth frames justify the price, while the asset and earnings-power frames, reading depressed trailing earnings, see it differently.

The valuation question is whether the mid-cycle margin is the right anchor. The first quarter of 2026 supports it, with an adjusted operating margin of 14.9 percent, unit revenue up 16.4 percent, and base fares up 19.8 percent, all of which suggest the normalized earnings power is real and returning. The Sunseeker exit removes a loss-making drag, and the 737 MAX fleet additions lower unit costs, both of which argue the mid-cycle margin is achievable. Against that, the business carries roughly $1.29 billion of net debt and the inherent volatility of fuel, demand, and now a pending Sun Country acquisition. The investment case is a classic cyclical-value setup: if Allegiant earns anywhere near its mid-cycle margin through the next few years, the 10-times multiple is too cheap and the stock re-rates upward; if fuel spikes, leisure demand softens, or the acquisition disrupts the recovery, the normalized earnings do not materialize and the low multiple proves to be a fair price for a leveraged airline. The reward is the gap between the depressed price and normalized earnings; the risk is that an airline rarely gets to sit at mid-cycle for long.

Catalysts

Margin recovery is the central catalyst. The first-quarter 2026 adjusted operating margin of 14.9 percent, the best first quarter since the pandemic, came on a 16.4 percent rise in unit revenue and a 19.8 percent jump in average base fare. Whether Allegiant sustains mid-teens margins through the rest of the year, as leisure demand and pricing hold, is the key signal that the mid-cycle earnings the valuation leans on are real.

The Sun Country acquisition is the near-term strategic catalyst. The deal cleared HSR and received DOT approval for a joint interim exemption, with special meetings set for May 8, 2026 and closing expected as early as May 13, 2026. The closing, the integration plan, and the capital commitment are the events to track, since the acquisition reshapes the investment case in either direction.

Fuel and demand are the swing factors. Lower fuel prices helped the recent margin, and the filing warns fuel availability and pricing are subject to surplus, shortage, and disruptions outside the company's control. Fuel-cost moves, leisure travel demand, and the integration of the nine added 737 MAX aircraft into a flat-capacity 2026 plan are the external catalysts. Quarterly results and any guidance updates remain the main proof points on whether the margin recovery is holding and the Sunseeker-free, re-focused airline is earning its normalized returns.

Peer Cohorts (Per Segment, With Filing Citations)

Airline (reported)

Sunseeker Resort (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive ALGT report on boothcheck