Investment Thesis
Despite 12.1% revenue growth and strong free cash flow generation, Allegiant faces severe financial distress with an interest coverage ratio of only 0.5x, indicating operating income cannot cover debt service obligations. The combination of high leverage (1.63x debt/equity), weak profitability metrics (3.9% ROE, 5.8% net margin), flat net income growth despite revenue expansion, and a sub-1.0 current ratio creates elevated bankruptcy risk in this cyclical industry.
Strengths
- Solid revenue growth of 12.1% YoY demonstrates market demand and operational scaling
- Exceptional free cash flow generation with 30.4% FCF margin providing near-term liquidity buffer
- Strong operating cash flow of $268.1M supports current operations independent of profitability trends
Risks
- Critical interest coverage of 0.5x indicates operating income cannot service debt; unsustainable debt dynamics
- High leverage with 1.63x debt/equity ratio and $1.8B long-term debt creates default vulnerability
- Current ratio of 0.91x signals liquidity stress; margin compression despite revenue growth suggests deteriorating unit economics
Key Metrics to Watch
- Interest coverage ratio trajectory - must improve above 2.5x to indicate financial stability
- Operating margin preservation - critical to ensure revenue growth converts to sustainable cash profits
- Free cash flow sustainability - monitor if strong FCF can persist if demand weakens or fuel costs rise
Financial Metrics
Revenue
732.4M
Net Income
42.5M
EPS (Diluted)
$2.30
Free Cash Flow
222.6M
Total Assets
4.4B
Cash
283.4M
Profitability Ratios
Gross Margin
N/A
Operating Margin
11.1%
Net Margin
5.8%
ROE
3.9%
ROA
1.0%
FCF Margin
30.4%
Balance Sheet & Liquidity
Current Ratio
0.91x
Quick Ratio
0.91x
Debt/Equity
1.63x
Debt/Assets
75.2%
Interest Coverage
0.54x
Long-term Debt
1.8B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-07T07:20:06.448168 |
Data as of: 2026-03-31 |
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