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A month has gone by since the last earnings report for Air Transport Services (ATSG). Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Air Transport Services due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Air Transport Services Group’s Earnings Beat Mark in Q2
Air Transport Services Group’s second-year 2020 earnings (excluding $2.25 from non-recurring items) of 47 cents per share surpassed the Zacks Consensus Estimate by 16 cents. Moreover, the bottom line improved 74.1% year over year. Results were aided by a 12.9% increase in total revenues to $377.8 million. The top line also surpassed the Zacks Consensus Estimate of $359.4 million.
Higher revenues from both segments contributed to the top line. While revenues from the CAM segment climbed 8.3% to $79.4 million, the same from ACMI services. ascended 12.8% to $287.6 million.
Notably, revenues from the CAM segment were bumped up by the deployment of seven 767 freighters since Jun 30, 2019. Meanwhile, the uptick in revenues from the ACMI unit was owing to incremental charter assignments for Omni Air from the federal government in the current scenario. More frequency in air express network flying following deployment of flights to bring back people stranded abroad to the United States during the onset of the pandemic also boosted segmental results. Meanwhile, external revenues from other activities inched up 1.2% to $40.2 million owing to growth in aviation fuel sales and ground handling services.
Total operating expenses flared up 19.4% in the June quarter to $354.6 million due to a 22.2% rise in costs on salaries, wages and benefits.
Courtesy of upbeat demand for its cargo aircraft and related airline services and better-than-expected demand from governmental agencies for passenger charter flights in the June quarter, the company expects 2020 adjusted EBITDA to be at least $470 million, indicating an improvement from the 2019 reported figure of $452 million. Capital expenditures for the ongoing year are now projected at roughly $465 million (earlier guidance: $420 million).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.77% due to these changes.
Currently, Air Transport Services has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Air Transport Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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