On June 30, 2026, Allegiant Travel Company (ALGT) unveiled an updated second-quarter 2026 guidance, stating that post the completion of the acquisition of Sun Country Airlines on May 13, 2026, the combined company is likely to have a collective impact on the second-quarter results from the date of deal-closure till June 30, 2026.
An upbeat guidance always acts as a positive indicator of the company’s prospects. Given this backdrop, the question that naturally arises is: Should investors buy, hold, or sell Allegiant stock now? A more in-depth analysis is needed to make that determination. Before diving into ALGT’s investment prospects, let’s take a glance at its financial numbers.
Allegiant’s Bullish Q2 Outlook
Allegiant now anticipates second-quarter 2026 adjusted earnings per share (EPS) for the combined entity to be at least $1.25. This marks an improvement on ALGT’s prior standalone guidance issued on April 30, 2026, which assumed an adjusted EPS to range from a loss of a penny to breakeven. The Zacks Consensus Estimate is currently pegged at a loss of 54 cents per share.
For the second quarter, average fuel cost per gallon is now anticipated to be around $4.20 per gallon compared with the prior view of $4.35 per gallon.
The encouraging guidance came on the back of the favorable demand environment witnessed at both airlines throughout the duration of the quarter, along with a reduction in fuel expense during June.
Notably, oil prices declined by almost 31% during the April-June 2026 period, with oil prices being down 20% in June 2026 alone. As fuel expenses represent a key input cost for any transportation player, a fall in oil prices bodes well for the bottom-line growth of airline stocks.
Apart from the aforesaid metrics, ALGT expects a 20% effective tax rate and 23.5 million diluted weighted average shares outstanding for the second quarter. On a standalone basis, Allegiant now anticipates second-quarter 2026 total revenue per available seat mile to increase more than 23% from a year earlier, exceeding its prior expectations.
Allegiant’s Price Performance
Shares of Allegiant have had a good time on the bourses of late, improving in double-digits so far this year. The encouraging price performance resulted in ALGT outperforming its industry as well as other industry players like Southwest Airlines Co. LUV) and Ryanair Holdings RYAAY in the same timeframe.
ALGT Stock’s YTD Price Comparison
What Do Earnings Estimates Say for ALGT?
The negative sentiment surrounding Allegiant stock is evident from the fact that the Zacks Consensus Estimate for the second quarter of 2026 and the third quarter of 2026 earnings has been revised downward in the past 90 days. The consensus mark for 2026 earnings has also been projected downward in the past 90 days.
The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Unattractive Valuation Picture for ALGT Stock
Allegiant looks expensive from a valuation standpoint. Considering the forward 12-month price-to-sales ratio (P/S-F12M), ALGT is trading at a premium compared to the industry.
The stock has a forward 12-month P/S-F12M of 0.75X compared with 0.64X for the industry over the past five years. The company’s forward 12-month P/S-F12M ratio is also above the median level of 0.56X over the past five years. These factors indicate that the stock’s valuation is unattractive.
ALGT P/S Ratio (Forward 12 Months) Vs. Industry
Not an Opportune Time to Buy ALGT Stock
Allegiant’s second-quarter 2026 earnings guidance have been aided by favorable demand environment witnessed at both airlines (allegiant and Sun Country) throughout the duration of the quarter along with reduction in fuel expense during June. We would like to remind investors that, as fuel expenses represent a key input cost for any transportation player, a fall in oil prices bode well for the bottom-line growth of airline stocks.
Despite an encouraging outlook, we advise investors not to buy ALGT stock now due to the headwinds it continues to face, such as fuel price volatility, rising labor and recovery costs and macro uncertainty, which can pressure margins and amplify near-term earnings swings for shareholders. Boeing production and regulatory constraints can disrupt fleet plans and delay expected cost and reliability benefits from new aircraft. Share price volatility, coupled with an unattractive valuation, acts as another concern.
We, therefore, advise investors to wait for a better entry point. For those who already own the stock, it will be prudent to stay invested. The company’s current Zacks Rank #3 (Hold) justifies our analysis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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