Air Transport's Business Looks More Stable Than The Share Price

Share prices are almost always more volatile than underlying business trends, but the last year or so at Air Transport Group (ATSG) looks like a more extreme example of this. Although the company has expanded its business with Amazon (AMZN), re-upped most of its business with Deutsche Post DHL (OTCPK:DPSGY), added UPS (UPS), and taken strides to securing better future freight conversion supply, the shares have bounced between $19 and $26, with worries about U.S.-China trade policy no doubt playing at least some role in that volatility.

Simply considering the commitments Amazon had made to expand its proprietary logistics operations, I’m just not that worried about Air Transport’s outlook, and I think that Amazon relationship provides some floor to the business. Likewise with the deeper ties with the Department of Defense brought in with the Omni deal. EBITDA margins of 30%-plus in 2019 and 2020 can support a 6.75x forward EBITDA multiple and a fair value in the mid-high $20’s, suggesting these shares still have upside.

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Air Transport's Business Looks More Stable Than The Share Price