Why has Air Transportation Services (ATSG) fallen 3.6% since the last earnings report? – June 4, 2021

A month has passed since the last report on the results of Air Transport Services (ATSG Free report). Stocks lost around 3.6% over that time frame, underperforming the S&P 500.

Will the recent negative trend continue until its next earnings release, or is Airline Services likely to experience a breakout? Before we dive into how investors and analysts have reacted in recent times, let’s take a quick look at his latest earnings report to better understand the important factors.

Airline services group profits miss mark in first quarter

Air Transport Services Group earnings (excluding 30 cents of one-time items) of 19 cents a share fell short of Zacks’ consensus estimate of 26 cents. In addition, net income deteriorated 55.8% year over year due to the disappointing performance of its revenues. In addition, revenues were down 3.4% year-over-year to $ 376.1 million. Revenue also failed to hit Zacks’ consensus estimate of $ 379.5 million.

Revenues were penalized by lower revenues from the ACMI services segment. Before eliminations, revenues for the ACMI service unit decreased 13% to $ 247.13 million. The CAM segment increased 12.2% to $ 83.27 million while revenues from other activities increased 17.1% to $ 93.69 million.

Notably, CAM segment revenues in the reported quarter were increased by the external rentals of 15 additional 767-300 freighters during the reported quarter. Segment revenues from external customers increased 30% in the March quarter. However, the decline in ACMI unit revenue was due to the reduction in charter passenger operations for Omni Air’s commercial customers and the decline in 757 combi operations for the military in addition to the withdrawal of four Boeing 757 cargo aircraft. (operated by the company for DHL) in 2020. Due to coronavirus-induced restrictions, the total number of block hours in the reported quarter fell 5% to around 38,000 hours.

The company’s total fleet included 104 planes (19 passengers and 85 cargo) in service at the end of the March 2021 quarter compared to 96 at the end of the first quarter of 2020. Of the 104 planes, 98 belonged to CAM, four have been leased to Omni Air by third parties and the other two have been sublet to a customer.

Total operating expenses decreased 6% in the March quarter to $ 319.23 million, mainly due to a 30.6% reduction in fuel expenses. Capital spending fell 12.8% to $ 125.4 million. The amount included $ 84.7 million for the purchase of four Boeing 767-300s.

Outlook

The company still expects 2021 Adjusted EBITDA to be at least $ 525 million, indicating a 6% improvement from the $ 497 million figure released in 2020. Capital expenditure for 2021 are still projected at around $ 500 million.

How have the estimates evolved since?

Over the past month, investors have seen a downward trend in revised estimates. The consensus estimate has changed by -15.39% due to these changes.

VGM scores

Currently Air Transport Services has a good growth score of B, although it lags a bit behind the Momentum Score front with a C. However, the stock received an A rating on the value side, which places it in the top 20%. for this investment strategy.

Overall, the stock has an overall VGM score of A. If you’re not strategy-focused, this score is the one you should be interested in.

Outlook

The estimates have had a general downward trend for the stock, and the magnitude of this revision indicates a downward change. Notably, Air Transport Services has a Zacks Rank # 3 (Hold). We expect the stock to come back online in the coming months.

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