The most profitable and the highest valuation
At around $84 per share, Allegiant Travel is worth around $1.6 billion on the market. The market values Allegiant Travel at 7.9 times EV/EBITDA. Compared to its peers, including Southwest Airlines Co. (NYSE:LUV) and JetBlue Airways Corporation (NASDAQ:JBLU), Allegiant Travel is the smallest company, but it has the most expensive valuation.
Southwest Airlines, at around $13 per share, has a total market cap of $9.5 billion. It is valued a bit cheaper at 6.1 times EV/EBITDA. JetBlue Airways Corporation (NASDAQ:JBLU) is trading at nearly $6 per share, with a total market cap of around $1.7 billion. It also has a lower valuation than Allegiant Travel, at 6.5 times EV/EBITDA.
Allegiant Travel seems to deserve a higher valuation than the other two peers, as it is the most profitable company. It has the highest operating margin at 15%, while the operating margins of Southwest Airlines and JetBlue Airways Corporation (NASDAQ:JBLU) are only 4.7% and 7.2%, respectively. Allegiant Travel also delivered the highest return on invested capital at 13.94%. Southwest Airlines ranked second with 3.25% ROIC, while the ROIC of JetBlue Airways Corporation (NASDAQ:JBLU) is the lowest, at only 0.52%.
My Foolish take
With a strong balance sheet, unique business model, consistent revenue, and earnings growth, Allegiant is the most profitable company and is reasonably valued. These factors lead me to believe that Allegiant could be a buy at its current price.
The article An Airline for Investors to Consider originally appeared on Fool.com.
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