Why Is Air Transport Services (ATSG) Down 11.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Air Transport Services (ATSG). Shares have lost about 11.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Air Transport Services due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Q1 Earnings Beat at ATSG

Quarterly earnings (excluding 3 cents from non-recurring items) of 16 cents per share surpassed the Zacks Consensus Estimate of 13 cents but plunged 55.6% year over year.  Customer revenues (derived after eliminating internal revenues from total revenues) of $485.5 million edged past the Zacks Consensus Estimate of $484.2 million but fell 3.1% year over year.  Revenues from ACMI Services decreased 3.1% year over year to $323.8 million. Revenues from CAM and other operations declined 5.8% and 1.9% to $105.5 million and $109 million, respectively.

Adjusted EBITDA fell 7.7% year over year to $127.3 million. Operating cash flow declined to $126.4 million from $216.4 million a year ago. Adjusted free cash flow was $96 million compared with $162.1 million in the prior year.

ATSG now anticipates  adjusted EBITDA of almost $516 million (earlier outlook was $506 million). The improved outlook for adjusted EBITDA is owing to the anticipation of more flying opportunities from 10 Amazon-provided 767-300s). Adjusted earnings per share is still expected in the range of 55-80 cents for 2024. Capital spending is still projected to be $410 million.

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 -14.87% due to these changes.

VGM Scores

Currently, Air Transport Services has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions 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.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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