The arrival was a little delayed, but it looks like Air Transport Group (NASDAQ:ATSG) is finally getting some of the credit I think it deserves for the quality freighter leasing business it has been building for several years. While a lack of exposure to the spot market may explain why the shares had lagged a bit before, they have risen about 15% since my last update, more or less matching Atlas Air (AAWW) over that period.
Valuation is challenging (as in “difficult to model/calculate” not “expensive”). While management is right to note the significant structural free cash flow base that the company has built, the reality is that growth is still tied to ongoing growth CapEx. The shares trade at a low multiple to forward EBITDA and still look priced for a high single-digit total annualized return at this level; perhaps not compelling enough for some investors today, but still with upside to margin improvement.
Read the full article here:
Air Transport Group Delivering On At Least Some Of Its Potential
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