Third-quarter airline services (ATSG) earnings and revenue beat estimates

Air Transport Services (ATSG) posted quarterly earnings of $0.60 per share, beating Zacks consensus estimate of $0.53 per share. That compares to earnings of $0.60 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents a profit surprise of 13.21%. A quarter ago, this air cargo company was expected to post a profit of $0.51 per share when it actually produced a profit of $0.59, delivering a surprise of 15.69 %.

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

Air transport services, which is part of the Zacks Transportation – Air Cargo and Freight industry, reported revenue of $516.92 million for the quarter ended September 2022, beating Zacks’ consensus estimate of 3.68%. That compares to revenues of $465.96 million a year ago. The company has exceeded consensus revenue estimates three times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Airline services stocks have lost about 4.4% year-to-date versus a -21.1% decline for the S&P 500.

What’s next for air transport services?

With airline services outperforming the market so far this year, the question on investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable metric that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to this publication of the results, the trend of revisions to estimates for air transport services: mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a No. 3 (hold) Zacks ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.56 on $518.19 million in revenue for the upcoming quarter and $2.21 on $2.01 billion in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, Transportation – Air Cargo and Freight currently sits in the bottom 7% of Zacks 250+ industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Danaos (DAC), another stock in the broader Zacks Transportation sector, has yet to report results for the quarter ending September 2022. Results are expected to be released on November 7.

This shipping company is expected to post quarterly earnings of $7.42 per share in its next report, representing a year-over-year change of +39.5%. The consensus EPS estimate for the quarter has been revised up 2.3% in the past 30 days from the current level.

Danaos revenue is expected to be $232.29 million, up 18.6% from the prior year quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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