Allegiant Stock's 6-Month Rally: Should You Lock in Gains or Hold Tight?

ALGT has been on an impressive run lately, with shares of Allegiant Travel Company climbing over 50% in the past half-year. The stock has significantly outpaced both its industry peers and direct competitors like Southwest Airlines and Ryanair Holdings during this period. But with such a strong move already in the books, the burning question is: has the rally run its course, or is there more upside ahead?

Why ALGT Has Been Flying High

The tailwinds fueling Allegiant’s recent surge are substantial. Post-pandemic, air travel demand has rebounded strongly, and the company is capitalizing on this trend. During the first nine months of 2025, revenue grew 3.5% year-over-year, driven primarily by a 3.9% jump in passenger revenues—which represent 88.6% of total sales. Management is confident enough to project another strong quarter, with capacity expected to expand 10% YoY and adjusted operating margins forecast between 10% and 12%.

The company’s fleet modernization push is also noteworthy. Allegiant is gradually replacing older aircraft with newer, more efficient models. By Q3 2025, the fleet stood at 121 planes, with plans to reach 123 by year-end 2025. This strategic refresh should improve both operational efficiency and environmental credentials—a win for investors concerned about sustainability.

Financially, Allegiant’s balance sheet is solid. The airline ended Q3 2025 with $985.32 million in cash against just $270.63 million in debt, providing substantial cushion for obligations and shareholder returns. In 2024, the company distributed $21.9 million in dividends and bought back $6 million in shares. During the first nine months of 2025, Allegiant repurchased $12.95 million in stock, signaling management confidence in long-term value.

The Earnings Story Gets Better

Management recently raised full-year 2025 guidance, now expecting adjusted EPS above $3.00 (up from prior guidance of above $2.25) and airline-specific adjusted EPS above $4.35 (up from above $3.25). The current Zacks Consensus for 2025 EPS sits at $2.97, and analyst estimates have been trending upward over the past 60 days—a bullish signal.

The Valuation Case Is Compelling

From a valuation standpoint, ALGT presents an attractive opportunity. The stock trades at a P/B ratio of 1.53X on a forward 12-month basis, well below the industry average of 3.10X over the past five years. With a Value Score of A, the stock doesn’t appear stretched even after its recent gains.

The Clouds on the Horizon

However, several headwinds deserve serious consideration. Tariff uncertainty and macroeconomic turbulence are creating nervousness among consumers and corporations alike, which could dampen discretionary travel spending.

Production delays at Boeing—stemming from quality control and FAA regulatory reviews—are creating bottlenecks for aircraft deliveries across the industry, including Allegiant. These delays mean higher maintenance costs for aircraft that should have been retired, additional interest expense on pre-delivery deposits, and constrained capacity growth.

Most concerning is the labor cost squeeze. Allegiant saw labor costs surge 19.2% in 2024, and despite aircraft fuel costs declining, total operating expenses jumped 20.3% that year. The trend continued in the first nine months of 2025, with operating expenses up 6.4% YoY, driven by labor agreements. Management expects this cost pressure to persist.

The Verdict: Hold, Don’t Chase

ALGT stock presents a mixed picture. The recovery in air travel, improving financials, and attractive valuation are genuine positives. Yet macroeconomic uncertainty, aircraft delivery delays, and escalating labor costs create meaningful headwinds that could limit upside over the near term.

For new investors, it’s prudent to wait for a better entry point—perhaps a pullback that prices in these challenges more fairly. For those already holding shares, there’s no compelling reason to exit. The company’s Zacks Rank of #3 (Hold) aligns with this cautious stance: the risk-reward isn’t sufficiently skewed in either direction to aggressively add or reduce positions at current levels.