If You Invested $1,000 In Airline Services Ten Years Ago, Here’s How Much It Would Be Worth Now
For most investors, the movement of a stock’s price over time is important. This factor can impact your investment portfolio and help you compare investment results across sectors and industries.
Another thing that can drive investing is fear of missing out, or FOMO. This especially applies to tech giants and popular consumer stocks.
What if you had invested in air transport services (ATSG) ten years ago? It may not have been easy to hold on to the ATSG all this time, but if it was, how much would your investment be worth today?
In-depth activity of air transport services
With that in mind, let’s take a look at the key business drivers of Air Transport Services.
Air Transport Services Group is one of the world’s leading providers of aircraft leasing, air cargo transportation and related services. Additionally, this Wilmington, OH-based company is the largest cargo aircraft lessor in the world and operates through numerous subsidiaries.
Additionally, it owns and operates the following airline subsidiaries, namely ABX Air Inc., Air Transport International Inc. and Omni Air International, LLC. Additionally, 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 to external companies.
Additionally, the company, founded in 1980, is the largest provider of passenger charter services to the United States Department of Defense (DoD) and other government agencies. The DoD accounted for 26% of company revenue in 2021.
Besides the Department of Defense, the company’s main customers are 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 transport-related services to its customers, including aircraft maintenance and modification, ground handling and crew training.
The Air Transport Services Group mainly operates through the following reporting segments, namely cargo aircraft management or CAM and ACMI (aircraft, crew, maintenance and insurance) services.
The CAM segment (which accounted for 19.2% of 2021 revenue) is responsible for the company’s aircraft leasing operations. As of December 31, 2021, CAM had 85 jets on lease with external customers.
The ACMI Services segment (accounting for 61.4% of 2021 revenue) is responsible for the operations of the aforementioned airline subsidiaries of the company. These airlines provide air transport operations to customers. As of December 31, 2021, ABX, Air Transport International and Omni Air International have leased 22 in-service jets internally from CAM for use in ACMI services.
The rest of the turnover was represented by other activities in 2021, ravaged by the coronavirus. The fiscal year of the company coincides with the calendar year.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a bit of risk. If you invested in airline services ten years ago, you’re probably feeling pretty good about your investment today.
A $1,000 investment made in August 2012 would be worth $6,827.81, 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 rose 6.37% over the same period in comparison.
Analysts also expect more upside for the ATSG.
The rise in e-commerce demand in these coronavirus-ravaged times is a tailwind for Air Transport Services Group. Driven by increased demand for mid-size freighters, the company released a bullish outlook for 2022 Adjusted EBITDA. The company expects the metric to be $640 million, or nearly $100 million above 2021 levels. In addition, the performance of the Cargo Aircraft Management (CAM) unit (revenue up 24.8% year-on-year in the first half of 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, the increase in fuel expenses (up 99% in the June quarter) is limiting the growth in net income. High capital expenditure due to large investments in the purchase of aircraft can also be troublesome. The ATSG has increased its investment forecast for 2022.
Shares have gained 12.23% in the past four weeks and there have been 2 higher earnings estimate revisions for fiscal 2022 compared to none lower. The consensus estimate also increased.
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