For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Air Transport Services (ATSG) ten years ago? It may not have been easy to hold on to ATSG for all that time, but if you did, how much would your investment be worth today?
Air Transport Services' Business In-Depth
With that in mind, let's take a look at Air Transport Services' main business drivers.
Air Transport Services Group is a leading provider of aircraft leasing, and air cargo transportation and related services,globally. Moreover, this Wilmington, OH-based company is the largest lessor of freighter aircraft across the globe and operates through many subsidiaries.
Additionally, it owns and operates the following airline subsidiaries, namely ABX Air Inc., Air Transport International Inc., and Omni Air International, LLC. Moreover, Air Transport Services Group’s in-service fleet size at the end of 2021 was 117, of which 107 were owned. The remaining jets were leased from external companies.
Moreover, the company, founded in 1980, is the largest provider of passenger charter service to the United States Department of Defense (DoD) and other governmental agencies. The DoD accounted for 26% of the company's revenues in 2021.
Apart from the Department of Defense, major customers of the company include Amazon.com, DHL and United Parcel Service. UPS is Air Transport Services Group's newest 767 freighter lease customer.
The company also offers a wide range of air-transportation-related services to its customers including aircraft maintenance and modification, ground handling and crew training.
Air Transport Services Group primarily operates through the following reporting segments, namely Cargo Aircraft Management or CAM and ACMI (aircraft, crew, maintenance & insurance) Services.
The CAM segment (which accounted for 19.2% of 2021 revenues) is responsible for the company's aircraft leasing operations. As of Dec 31, 2021, CAM had 85 jets under lease to external customers.
The ACMI Services segment (representing 61.4% of 2021 revenues) is responsible for the operations of the company’s above-mentioned airline subsidiaries. These airlines provide airlift operations to customers. As of Dec 31, 2021, ABX, Air Transport International and Omni Air International leased 22 in-service jets internally from CAM so that those could be utilized in ACMI Services.
The remainder of the top line was accounted for by other activities in the coronavirus-ravaged 2021. The company’s fiscal year coincides with the calendar year.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Air Transport Services ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in August 2012 would be worth $6,827.81, or a gain of 582.78%, as of August 10, 2022, according to our calculations. This return excludes dividends but includes price appreciation.
The S&P 500 rose 193.87% and the price of gold increased 6.37% over the same time frame in comparison.
Analysts are forecasting more upside for ATSG too.
Surge in e-commerce demand during these coronavirus-ravaged times is a tailwind for Air Transport Services Group. Driven by increased demand for midsize freighters, the company has issued a bullish adjusted EBITDA view for 2022. The company expects the metric to be $640 million, nearly $100 million above the 2021 levels. Additionally, performance of the Cargo Aircraft Management (CAM) unit (revenues up 24.8% year over year in first-half 2022) is encouraging. The positivity surrounding the stock is evident from the northward movement of the Zacks Consensus Estimate for current-year earnings over the past 60 days. However, escalated fuel expenses (up 99% in the June quarter) are limiting bottom-line growth.High capital expenditures due to hefty investments on purchase of aircraft may may also be bothersome. ATSG has increased its 2022 capex guidance.
Shares have gained 12.23% over the past four weeks and there have been 2 higher earnings estimate revisions for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.
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