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Air Methods Corp. - Momentum
7/24/2012 1:00:00 AM
Air Methods Corporation ( AIRM ) has delivered positive earnings surprises for four straight quarters with an average beat of 12.2%. This strong momentum received a further boost on July 18, 2012, when this Zacks #1 Rank (Strong Buy) declared preliminary second-quarter 2012 results that were ahead of its previous guidance.
Going forward, this leading air medical transporter should be able to maintain its uptrend since its business is less vulnerable to macroeconomic downturn and due to high barriers to entry.
Robust Start to 2012
On May 3, Air Methods reported first-quarter 2012 net earnings per share of 97 cents, surpassing the Zacks Consensus Estimate by 19 cents or 24.4% and the year-ago earnings by a massive 50 cents or 106.4%. Total operating revenue of around $190.8 million beat the Zacks Consensus Estimate by 4.5% and increased 44.6% year over year.
Segment wise, Community-based revenue was up 65%, Hospital-based revenue was up 12% while United Rotorcraft improved 25%. First quarter EBITDA increased 55% year over year to $46.6 million.
Uptrend to Continue in 2Q
On July 18, Air Methods projected second-quarter 2012 earnings per share between $2.30 and $2.40. This would be a remarkable improvement over last year's 77 cents. As per the preliminary release, total Community-based patient transport increased 47% year over year to 15,134. Management cited growth in same-base transports, improved reimbursement for community-based transports and lower maintenance expense per flight hour as the main reasons for growth. Air Method will report its full second-quarter financial results on August 2.
Estimate Revisions on the Rise
Over the last 90 days, the Zacks Consensus Estimate for 2012 moved up 3.3% to $5.61 while it increased 4.5% to $6.31 for 2013. The current Zacks Consensus Estimate for 2012 indicates a year-over-year jump of 45.1%, while the 2013 estimate implies a year-over-year improvement of 12.4%.
Valuation of Air Methods looks reasonable. The current forward P/E of 17.54x implies a discount of 4% from the peer group average of 18.24x. The stock looks quite attractive given a trailing 12-month ROE of 19.8%, which is 67.8% higher than the peer group average of 11.8%. Additionally, Air Methods currently enjoys a 17.3% long-term growth potential.
Chart Shows Strong Momentum
The stock has been trading above its 50 and 200-day moving averages since May 2011 barring some minor fluctuations. The widening gap between the stock price line and that of the 50 and 200-day moving average lines show the growing momentum of Air Methods. Year-to-date, the stock has returned 22.7%, significantly outpacing the benchmark S&P 500 return of a little over 6.7%.
Englewood, Colorado-based Air Methods Corporation was founded in 1982. The company is a leading provider of air medical emergency transport services and systems in the U.S. It air drops critically ill persons requiring intensive medical care from the place of accident or general hospitals to trauma centers or tertiary care centers. At present, Air Methods owns, leases or maintains more than 400 helicopters and fixed wing aircraft.
AIR METHODS CRP (AIRM): Free Stock Analysis Report
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