Here's Why One Should Retain Air Transport Services (ATSG)
Air Transport Services Group, Inc. ATSG is benefiting from investor-friendly steps and fleet expansion. However, low liquidity is worrisome.
Factors Favoring ATSG
We are impressed by Air Transport Services’ efforts to reward its shareholders through buybacks. In November 2022, ATSG’s board of directors approved a new share repurchase authorization of $150 million shares, offsetting its previously exhausted share buybacks. It repurchased 50,000 shares in the second quarter of 2023.
Its fleet expansion is encouraging. Air Transport Services’ total fleet in service included 128 aircraft (18 passenger and 110 freighter) at 2022 end compared with 117 at 2021 end. It aims to end 2023 with a fleet size of 137 (18 passenger planes and 119 freighters).
Key Risks
ATSG's liquidity position is a concern. At the end of second-quarter 2023, its current ratio (a measure of liquidity) was 0.89. A current ratio of less than 1 is not desirable as it implies that the company has insufficient capital to pay off its short-term debt. This is because the proportion of liabilities for the company is larger compared with current assets.
Zacks Rank
ATSG currently carries Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks for investors interested in the Zacks Transportation sector are GATX Corporation GATX and Ryder System R.
GATX, which presently carries a Zacks Rank #2 (Buy), has strengthened its railcar leasing operations. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For third-quarter and full-year 2023, GATX’s earnings are expected to register 36.6% and 14.3% growth, respectively, on a year-over-year basis.
Ryder, which currently carries a Zacks Rank #2, is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Despite weak market conditions, Ryder reported better-than-expected earnings in second-quarter 2023. In fact, the company has an impressive earnings surprise history. R has surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark once), the average beat being 11.2%.
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Ryder System, Inc. (R) : Free Stock Analysis Report
Air Transport Services Group, Inc (ATSG) : Free Stock Analysis Report
GATX Corporation (GATX) : Free Stock Analysis Report
