Second Quarter Airline Services (ATSG) Profits Expected to Decline

Wall Street expects lower year-over-year profits on higher earnings when Air Transport Services (ATSG) releases results for the quarter ended June 2021. While this widely-known consensus outlook is important In assessing a company’s earnings position, a powerful factor that could affect its stock price in the short term is how actual results compare to those estimates.

The stock could move higher if these key figures exceed expectations for the next earnings report. On the other hand, if they run out, the stock may go down.

While the sustainability of the immediate price change and future profit expectations will depend primarily on management’s discussion of trading conditions when calling profits, it is worth crippling the likelihood of a positive surprise from the market. BPA.

Zacks consensus estimate

The air freight company is expected to post quarterly earnings of $ 0.24 per share in its next report, which represents a year-over-year change of -48.9%.

Revenue is expected to reach $ 386.55 million, up 2.3% from the prior year quarter.

Trend in estimated revisions

The consensus EPS estimate for the quarter has remained unchanged over the past 30 days. This essentially reflects how hedge analysts collectively reassessed their initial estimates during this time period.

Investors should be aware that an overall change may not always reflect the direction of estimate revisions by individual hedge analysts.

Whisper of gains

Revisions to estimates before a company’s earnings are released provide clues to business conditions for the period in which the results are released. Our exclusive surprise prediction model – the Zacks Earnings ESP (Expected Surprise Prediction) – has this idea at its heart.

Zacks Earnings ESP compares the most accurate estimate to Zacks’ consensus estimate for the quarter; most accurate estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts who revise their estimates just before the results are released have the latest information, which could potentially be more accurate than they and other consensus contributors predicted earlier.

Thus, a positive or negative ESP reading of earnings theoretically indicates the likely deviation of actual earnings from the consensus estimate. However, the predictive power of the model is only significant for positive ESP readings.

A positive ESP on earnings is a good predictor of a pace of earnings, especially when combined with a Zacks # 1 (strong buy), 2 (buy), or 3 (hold) ranking. Our research shows that stocks with this combination produce positive surprise almost 70% of the time, and a strong Zacks ranking actually increases the predictive power of ESP for earnings.

Please note that a negative ESP reading of earnings is not indicative of a shortfall. Our research shows that it is difficult to predict an increase in earnings with any degree of confidence for stocks with negative earnings ESP readings and / or a Zacks ranking of 4 (sell) or 5 (strong sell).

How have the figures evolved for air transport services?

For air transport services, the most accurate estimate is the same as Zacks ‘consensus estimate, suggesting that there are no recent analysts’ opinions that differ from what has been stated. considered to derive the consensus estimate. This resulted in an ESP on earnings of 0%.

On the other hand, the action currently carries a Zacks rank of # 3.

Thus, this combination makes it difficult to predict conclusively that air transport services will exceed the consensus EPS estimate.

Does the history of earnings surprises contain a clue?

Analysts often look at how well a company has been able to match consensus estimates in the past while calculating their estimates for future profits. So it’s worth taking a look at the surprise history to gauge its influence on the upcoming issue.

For the last published quarter, Air Transport Services was forecast to post a profit of $ 0.26 per share when it actually produced a profit of $ 0.19, offering a surprise of -26.92%.

In the past four quarters, the company has beaten consensus EPS estimates three times.

Final result

A gain or failure of gains may not be the only basis for a stock to move higher or lower. Many stocks end up losing ground despite declining earnings due to other factors that disappoint investors. Likewise, unforeseen catalysts help a number of stocks win despite a shortfall.

That said, betting on stocks that are expected to exceed profit expectations increases the chances of success. That’s why it’s worth checking out a company’s ESP results and Zacks rankings ahead of its quarterly release. Be sure to use our ESP Earnings Filter to uncover the best stocks to buy or sell before they get published.

Air Transport Services does not appear to be a convincing candidate in terms of earnings. However, investors should also pay attention to other factors when betting on this stock or staying on the sidelines before its results are released.

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