Here's Why You Should Sell Air Transport Services (ATSG) Now
Air Transport Services Group, Inc. ATSG is getting affected by increased fuel expenses and anticipates a 5% reduction in the use of cargo aircraft.
Let’s delve deeper.
Unimpressive Price Performance: A glimpse at the company’s price trend reveals that its shares have plunged 32.5% in the past year compared with 1.8% fall of the industry it belongs to.
Image Source: Zacks Investment Research
Weak Zacks Rank and Style Score: Air Transport Services currently carries a Zacks Rank #5 (Strong Sell). Moreover, ATSG’s current Momentum Style Score of D shows its short-term unattractiveness.
Southward Estimate Revisions: No estimates for 2023 moved north in the past 60 days versus five southward revisions, reflecting analysts’ lack of confidence in the company. The Zacks Consensus Estimate for 2023 earnings has declined 17.5% in the past 60 days.
Negative Earnings Surprise History: Air Transport Services has delivered a negative earnings surprise (two misses while beat twice) of 0.4%, on average.
Low Growth Prospects: The Zacks Consensus Estimate for 2023 earnings is pegged at $1.6 per share, which reflects year-over-year decrease of 29.8%.
Other Headwinds: An increase in expenses on fuel due to the current oil price surge is hurting ATSG's bottom line. Evidently, operating costs increased 24.8% in 2022 with fuel expenses rising 58.7%. Operating expenses rose in first-quarter 2023 as well. We expect operating costs to climb 8.6% in second-quarter 2023 from second-quarter 2022 actuals.
Management anticipates a 5% reduction in usage of cargo aircraft for 2023, highlighting the weakness pertaining to the air-cargo market. Softness of the air-cargo market will hurt ATSG's top line.
Stocks to Consider
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings, S.A. CPA and Allegiant Travel Company ALGT.
Copa Holdings, which presently flaunts a Zacks Rank #1 (Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and 2023, CPA’s earnings are expected to register 912.5% and 84.14% surge, respectively, on a year-over-year basis.
Allegiant, which currently carries a Zacks Rank #2 (Buy), is benefiting from a steady recovery in domestic and international air-travel demand.
ALGT has a strong cash position. Cash and cash equivalents of $317.6 million at the first-quarter 2023 end was higher than the current debt of $289.7 million. This implies that the company has enough cash to meet its debt burden.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Allegiant Travel Company (ALGT) : Free Stock Analysis Report
Air Transport Services Group, Inc (ATSG) : Free Stock Analysis Report
