Air Transport Services Group Leveraging Its E-Commerce-Driven Growth Opportunities

With the rapid growth in e-commerce and Amazon's (AMZN) ever-growing logistics needs, Air Transport Services Group (ATSG) continues to look like a relatively below-the-radar name worth considering. Customer concentration is a notable risk, but Amazon appears deeply committed to growing its logistical/delivery capabilities, and Air Transport Services Group's services are invaluable to the DoD as well. Free cash flow will remain difficult to predict on a year-to-year basis, but the underlying profitability of the business appears to be improving and adding A321 conversion capabilities down the road should only help.

Free cash flow modeling is challenging as the year-to-year commitments to growth capex can swing wildly with new contract wins (like the expanded business ATSG secured from Amazon late in 2018), but EV/EBITDA is a little more consistent and suggests worthwhile upside from here.

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Air Transport Services Group Leveraging Its E-Commerce-Driven Growth Opportunities