Allegiant Gains 64.2% in 6 Months: What Should Investors Do Now?

Shares of Allegiant Travel Company (ALGT) have had a good time on the bourses of late, improving in double-digits over the past six months. The encouraging price performance resulted in ALGT outperforming its industry in the said time frame. Additionally, ALGT’s price performance looks favorable compared with that of other industry players like Southwest Airlines Co. LUV) and Ryanair Holdings RYAAY in the same timeframe.

ALGT Stock’s Six-Month Price Comparison

Given the recent rally, the question that naturally arises is whether ALGT stock can sustain its bullish price performance or should investors book profits now. Before that, let's delve deep to unearth the reasons behind this northward price movement.

Tailwinds Working in Favor of ALGT

Improvement in air-travel demand, following the end of the pandemic and normalization of economic activities, bodes well for Allegiant's top line. With people taking to the skies, ALGT’s top line increased 3.7% on a year-over-year basis during 2025, owing to a 4.8% rise in passenger revenues, which accounted for the bulk (89.1%) of the top line. Given this encouraging backdrop, for the first quarter of 2026, adjusted operating margin is expected to lie between 12% and 15%.

Allegiant’s fleet-modernization initiatives to cater to the increased travel demand are encouraging. The inclusion of modern planes in its fleet and the retirement of the old ones align with its environmentally friendly approach. ALGT ended 2024 with 125 (34 A319, 87 A320 and four 737-8200) planes in its fleet. ALGT ended fourth-quarter 2025 with 123 (28 A319, 79 A320 and 16 Boeing 737-8200) planes. The company aims to have a fleet size of 123 by the end of first-quarter 2026, 125 at second-quarter 2026-end, 124 at third-quarter 2026-end. The company aims to have a fleet size of 123 by the end of 2026.

ALGT’s liquidity position looks encouraging. The airline ended fourth-quarter 2025 with cash and cash equivalents of $838.5 million, higher than the current debt level of $118.1 million. This implies that the company has sufficient cash to meet its current debt obligations.

A strong balance sheet enables the company to reward shareholders with dividends and share repurchases. As a reflection of its shareholder-friendly stance, ALGT paid out dividends worth $21.9 million and repurchased shares worth $6 million in 2024. During the first nine months of 2025, ALGT repurchased shares worth $12.95 million (did not pay any dividends). Such shareholder-friendly initiatives should boost investor confidence and positively impact the bottom line.

What Do Earnings Estimates Say for ALGT?

The positive sentiment surrounding the stock is evident from the fact that the Zacks Consensus Estimate for ALGT’s first-quarter 2026 earnings has been raised in the past 90 days. The consensus mark for 2026 and 2027 earnings has also been projected northward in the past 90 days.

The favorable estimate revisions indicate brokers’ confidence in the stock.

Impressive Valuation Picture for ALGT Stock

From a valuation perspective, ALGT is trading at a discount compared to the industry, going by its trailing 12-month price-to-book (P/B)ratio. The stock has a forward 12-month P/B-TTM of 1.87X compared with 3.17X for the industry over the past five years. These factors indicate that the stock’s valuation is attractive. The company has a Value Score of A.

ALGT P/B Ratio (trailing 12 months) Vs. Industry

Time to Buy ALGT Stock

It is understood that ALGT stock is attractively valued, and strong passenger volumes bode well for Allegiant. The company’s unique business model, coupled with its low-cost nature, offers diversified revenue streams from leisure travel flights as well as multiple travel services and product offerings. ALGT’s fleet modernization efforts to increase cost efficiencies while catering to increased travel demand are encouraging. A solid balance sheet and sufficient liquidity enable ALGT to reward shareholders with dividends and share buybacks without affecting investments in the business as required.

We believe the positives surrounding the stock (as highlighted throughout the write-up) outweigh the concerns regarding high labor costs, Boeing and Airbus-related delivery delays, tariff-induced economic uncertainties and share price volatility. We, therefore, suggest investors should add ALGT stock to their portfolios for healthy returns. The company’s Zacks Rank #1 (Strong Buy) further supports our thesis. You can see the complete list of today’s Zacks #1 Rank stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research