A month has gone by since the last earnings report for Air Transport Services (
ATSG Quick Quote ATSG - Free Report) . Shares have added about 5.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Air Transport Services due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Air Transport Services Group’s Earnings Beat Mark in Q4
Air Transport Services Group’s earnings (excluding 31 cents from non-recurring items) of 38 cents per share surpassed the Zacks Consensus Estimate of 34 cents. However, the bottom line deteriorated 32.1% year over year due to the disappointing revenue performance. Further, revenues declined 1% year over year to $399.4 million. The top line also fell short of the Zacks Consensus Estimate of $414.7 million.
The top line was hurt by lower revenues from the ACMI services segment. Before eliminations, revenues from the ACMI services declined 6.1% to $275.32 million. CAM segment climbed 11.6% to $83.36 million while revenues from other operations increased 7.5%. Notably, revenues from the CAM segment in the reported quarter were bumped up by the deployment of 11 more 767-300 freighters. Segmental revenues from external customers rose 28% in the December quarter. However, the downside in revenues from the ACMI unit was due to the reduction in charter passenger operations for the commercial customers of Omni Air and lower 757 combi operations for the military. Due to the coronavirus-induced restrictions, Omni Air’s block hours for commercial passenger operations declined. The company’s total fleet included 106 aircraft (20 passenger and 86 cargo) in service at the end of the December quarter of 2020 compared with 98 at the end of the fourth quarter of 2019. Of the 106 planes, 100 were owned by CAM, four were leased to Omni Air by third parties and the remaining two were customer-provided. Total operating expenses dipped 3.2% in the December quarter to $339.92 million, mainly owing to a 29.3% reduction in expenses on fuel. Capital expenditure flared up 11.1% to $510.4 million in 2020. The amount included $353.4 million on the purchase of 11 Boeing 767-300 jets. Outlook
The company expects 2021 adjusted EBITDA to be at least $525 million, indicating an improvement of 6% from the 2020 reported figure of $497 million. Capital expenditures for 2021 are projected to be roughly identical to 2020 levels
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -41.38% due to these changes.
At this time, Air Transport Services has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Air Transport Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.