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’s (ATSG - Free Report) top line is hindered by its weak segmental performance. The company is grappling with a host of intricate challenges, a scenario we believe has significantly diminished its attractiveness as an investment opportunity.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 72% downward in the past 90 days. For the current year, the consensus mark for earnings has moved 50% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: ATSG currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: Air Transport Services’ shares have declined 22.4% in the past year compared with its industry’s 9.6% fall.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which ATSG belongs currently has a Zacks Industry Rank of 229 (out of 250). Such an unfavorable rank places it in the bottom 8% of 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.
Other Headwinds: Air Transport Services is challenged by the weak demand scenario, adversely impacting its performance. Reduced demand in both the leasing segment and passenger airline operations, along with the ongoing Israel-Hamas conflict, is expected to further affect its results.
The two operating segments of the company, Cargo Aircraft Management ("CAM") and ACMI (aircraft, crew, maintenance and insurance) Services, saw revenues decline in the latest financial report. ACMI Services' revenues dropped by 3.1% year over year to $323.8 million, while CAM experienced a 5.8% decrease to $105.5 million. Other operations also saw a decline of 1.9% to $109 million.
Moreover, ATSG’s financial stability is challenged by its weak liquidity. In the first quarter of 2024, the company’s current ratio (a measure of liquidity) was pegged at 0.75. A current ratio of less than 1 is not desirable as it implies that it has insufficient capital to pay off its short-term debt.
SkyWest currently carries a Zacks Rank #2 (Buy) and has an expected earnings growth rate of 787% for the current year.
SKYW has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 128%. Shares of SkyWest have jumped 108.6% in the past year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 10.3%. Shares of Kirby have climbed 64.3% in the past year.
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’s (ATSG - Free Report) top line is hindered by its weak segmental performance. The company is grappling with a host of intricate challenges, a scenario we believe has significantly diminished its attractiveness as an investment opportunity.
Let’s delve deeper.
Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-quarter earnings has been revised 72% downward in the past 90 days. For the current year, the consensus mark for earnings has moved 50% south in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.
Weak Zacks Rank: ATSG currently carries a Zacks Rank #4 (Sell).
Unimpressive Price Performance: Air Transport Services’ shares have declined 22.4% in the past year compared with its industry’s 9.6% fall.
Image Source: Zacks Investment Research
Bearish Industry Rank: The industry to which ATSG belongs currently has a Zacks Industry Rank of 229 (out of 250). Such an unfavorable rank places it in the bottom 8% of 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.
Other Headwinds: Air Transport Services is challenged by the weak demand scenario, adversely impacting its performance. Reduced demand in both the leasing segment and passenger airline operations, along with the ongoing Israel-Hamas conflict, is expected to further affect its results.
The two operating segments of the company, Cargo Aircraft Management ("CAM") and ACMI (aircraft, crew, maintenance and insurance) Services, saw revenues decline in the latest financial report. ACMI Services' revenues dropped by 3.1% year over year to $323.8 million, while CAM experienced a 5.8% decrease to $105.5 million. Other operations also saw a decline of 1.9% to $109 million.
Moreover, ATSG’s financial stability is challenged by its weak liquidity. In the first quarter of 2024, the company’s current ratio (a measure of liquidity) was pegged at 0.75. A current ratio of less than 1 is not desirable as it implies that it has insufficient capital to pay off its short-term debt.
Stocks to Consider
Some better-ranked stocks for investors’ consideration in the Zacks Transportation sector include SkyWest (SKYW - Free Report) and Kirby Corporation (KEX - Free Report) .
SkyWest currently carries a Zacks Rank #2 (Buy) and has an expected earnings growth rate of 787% for the current year.
SKYW has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 128%. Shares of SkyWest have jumped 108.6% in the past year.
KEX has a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Kirby has an expected earnings growth rate of 42.5% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 10.3%. Shares of Kirby have climbed 64.3% in the past year.