Allegiant Travel Company

AI-generated fair value estimate for this company.

Method: 10-year, two-stage unlevered FCF DCF. Normalized base-year FCF of $150M, set below the current negative TTM free cash flow (-$166.4M) because TTM capex of $586.7M is temporarily elevated by fleet integration tied to the newly completed Sun Country Airlines acquisition; the normalized figure is derived from average 2023-2026TTM operating cash flow (~$393M) less an assumed steady-state fleet capex run-rate of ~$300M/yr once integration spending normalizes. Years 1-5 FCF growth: 10%, 9%, 8%, 7%, 6% (Sun Country merger synergies plus demand). Years 6-10: 5%, 4.5%, 4%, 3.5%, 3% (fading to maturity). Discount rate: 9% (airline-appropriate WACC given ~1.3-1.5 equity beta and post-merger leverage). Terminal growth: 2.5%. Net debt: $1,799M (June 2026, per company financials). Shares outstanding: 27.17M. PV of FCF years 1-10 ~$1,373M + PV of terminal value ~$1,785M = enterprise value ~$3,158M; less net debt = equity value ~$1,359M; / 27.17M shares = ~$50.00/share.

Reasoning: Allegiant, now combined with Sun Country (deal completed in 2026), is a real operating airline with positive underlying operating cash flow, so a multi-stage unlevered FCF DCF is the appropriate method; the base FCF is deliberately normalized above the depressed/negative TTM free cash flow because current capex reflects a temporary fleet-integration and aircraft-delivery cycle rather than the combined company's steady-state cash-generating capacity, while the 9% discount rate and moderate net debt still reflect real airline cyclicality and leverage risk.