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Air Transport (ATSG) to Report Q4 Earnings: What's in Store?

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Air Transport Services Group ATSG is slated to release fourth-quarter 2019 results on Mar 2, after market close.

The company flaunts an impressive earnings record, having delivered a positive surprise in each of the last four quarters. The average beat is 17.1%.

Given this backdrop, let’s delve into the factors that might have influenced the company’s performance in the to-be-reported quarter.

Low fuel costs are likely to have aided the bottom line in the December quarter. The Zacks Consensus Estimate for fourth-quarter fuel expenses is currently pegged at $39.2 million, indicating a decline of 4.8% from the figure reported in third-quarter 2019.

Moreover, the company’s top line is likely to have been boosted by additional revenues from Omni Air International, acquired by Air Transport Services in Nov 2018. Both primary reporting segments of the company, namely Cargo Aircraft Management (CAM) and ACMI Services are likely to have performed well, thereby boosting overall revenues.

The Zacks Consensus Estimate for ACMI Services revenues is currently pegged at $284 million, suggesting an increase of 4.4% from the figure reported in third-quarter 2019. Higher aircraft leasing and related revenues are expected to have boosted the CAM division.  The Zacks Consensus Estimate for ACMI revenues currently stands at $73 million, implying a 2.8% rise from the figure reported in the third quarter.

However, higher capital expenditures, primarily due to the purchase of Boeing 767 jets, might reflect on the bottom-line results.

What Does the Zacks Model Say?

The proven Zacks model does not conclusively predict an earnings beat for Air Transport Services this time around. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Air Transport Services has an Earnings ESP of -12.94% as the Most Accurate Estimate is pegged at 37 cents, 6 cents lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Air Transport Services carries a Zacks Rank #2, currently.

Highlights of Q3 Earnings

In the last reported quarter, the company delivered a positive earnings surprise of 14.8%. However, the bottom line was flat year over year. Meanwhile, revenues soared 78.6% to $366.1 million.

Stocks to Consider                                            

Investors may consider Azul (AZUL - Free Report) , Mylan MYL and LATAM Airlines LTM as these stocks possess the right combination of elements to come up with an earnings beat in their next releases.

Azul has an Earnings ESP of +16.13% and a Zacks Rank of 1. The company will release fourth-quarter earnings numbers on Mar 12.

Mylan is a #3 Ranked stock and has an Earnings ESP of +0.11%. The company will release fourth-quarter earnings numbers on Feb 27.

LATAM Airlines has an Earnings ESP of +6.38% and a Zacks Rank of 2. The company will release fourth-quarter earnings numbers on Mar 3.

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