We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Avoid Air Transport Services (ATSG) Now
Read MoreHide Full Article
Air Transport Services Group, Inc. (ATSG - Free Report) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for the current-quarter eanings has been revised downward to 29 cents per share from 32 cents over the past 60 days.
For the current year, the consensus mark for earnings has moved 6.6% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: Air Transport Services currently carries a Zacks Rank #5 (Strong Sell).
Unimpressive Price Performance: ATSG has fallen 20% over the past three months against its industry’s 1.2% growth.
Other Headwinds: The increase in expenses on fuel due to the current oil price surge is hurting ATSG's bottom line. Evidently, operating costs jumped 24.8% in 2022 with fuel expenses rising 58.7%. Operating expenses increased 6.9% in the first nine months of 2023 as well. Weakness pertaining to passenger airline operations due to service-related issues has also resulted in a hike in unplanned travel and flight crew cost.
ATSG's liquidity position is a concern. At the end of the third quarter of 2023, ATSG’s current ratio (a measure of liquidity) was 0.92. A current ratio of less than 1 is not desirable as it implies that the company has insufficient capital to pay off its short-term debt. This is because the proportion of liabilities for the company is larger compared with current assets.
Bearish Industry Rank: The industry, to which ATSG belongs, currently has a Zacks Industry Rank of 232 (of 250 plus groups). Such an unfavorable rank places ATSG in the bottom 6% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
RYAAY, which carries a Zacks Rank #2 (Buy) at present, is benefiting from buoyant air-traffic scenario post Covid. Traffic grew 11% to 105.4 million during the first half of fiscal 2024. On the back of robust traffic scenario, RYAAY’s profit after tax was €2.18 billion during the first half of fiscal 2024, up 59% year over year. Ryanair expects fiscal 2024 traffic to be 183.5 million.
SKYW's fleet modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for 2024 earnings increased 3.5% in the past 60 days. SkyWest currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why You Should Avoid Air Transport Services (ATSG) Now
Air Transport Services Group, Inc. (ATSG - Free Report) is currently mired in multiple headwinds, which, we believe, have made it an unimpressive investment option.
Let’s delve deeper.
Southward Earnings Estimate Revisions: The Zacks Consensus Estimate for the current-quarter eanings has been revised downward to 29 cents per share from 32 cents over the past 60 days.
For the current year, the consensus mark for earnings has moved 6.6% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: Air Transport Services currently carries a Zacks Rank #5 (Strong Sell).
Unimpressive Price Performance: ATSG has fallen 20% over the past three months against its industry’s 1.2% growth.
Other Headwinds: The increase in expenses on fuel due to the current oil price surge is hurting ATSG's bottom line. Evidently, operating costs jumped 24.8% in 2022 with fuel expenses rising 58.7%. Operating expenses increased 6.9% in the first nine months of 2023 as well. Weakness pertaining to passenger airline operations due to service-related issues has also resulted in a hike in unplanned travel and flight crew cost.
ATSG's liquidity position is a concern. At the end of the third quarter of 2023, ATSG’s current ratio (a measure of liquidity) was 0.92. A current ratio of less than 1 is not desirable as it implies that the company has insufficient capital to pay off its short-term debt. This is because the proportion of liabilities for the company is larger compared with current assets.
Bearish Industry Rank: The industry, to which ATSG belongs, currently has a Zacks Industry Rank of 232 (of 250 plus groups). Such an unfavorable rank places ATSG in the bottom 6% of the Zacks industries. Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Therefore, reckoning the industry’s performance becomes imperative.
Stocks to Consider
Investors interested in the Zacks Transportation sector may consider some better-ranked stocks like Ryanair Holdings (RYAAY - Free Report) and SkyWest (SKYW - Free Report) .
RYAAY, which carries a Zacks Rank #2 (Buy) at present, is benefiting from buoyant air-traffic scenario post Covid. Traffic grew 11% to 105.4 million during the first half of fiscal 2024. On the back of robust traffic scenario, RYAAY’s profit after tax was €2.18 billion during the first half of fiscal 2024, up 59% year over year. Ryanair expects fiscal 2024 traffic to be 183.5 million.
SKYW's fleet modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for 2024 earnings increased 3.5% in the past 60 days. SkyWest currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.