Atlas Air Worldwide Can Turn Around, But Labor Peace Is Essential

The same wind can blow on two different ships and you can get two very different results, and the differences between Air Transport Group (ATSG) and Atlas Air Worldwide (AAWW) show just how important company-specific execution is. Both companies signed major agreements with Amazon (AMZN) almost three years ago, and it has been transformative for Air Transport, but far less so for Atlas Air, as the company has wrestled with significant labor difficulties and a rougher international air cargo market.

Atlas Air has the potential to be much, much better than this, but “potential” is a word that can get an investor into a lot of trouble. Labor peace and improved execution is absolutely critical, and Atlas Air would likewise be a major beneficiary of a better global trade and economic backdrop.

Read the full article here:
Atlas Air Worldwide Can Turn Around, But Labor Peace Is Essential

Air Transport Group Shareholders Have A Lot To Consider

It’s been a tough stretch for Air Transport Group (ATSG) since the company’s early October announcement that it would be acquiring Omni Air, with the shares down about 20%. The “good news”, if you really want to call it that, is that the company’s closest comp, Atlas Air (AAWW), has been even weaker, as have FedEx (FDX) and UPS (UPS) (with Atlas and FedEx also underperforming Air Transport on a trailing twelve month basis), as concerns have grown regarding the impact of trade protectionism on cargo/shipping demand. Of course, Air Transport did itself no favors with a miss and guide-down for the third quarter.

Between uncertainties in the global economy, Amazon’s (AMZN) plans, and management’s ability to execute, there’s a lot for Air Transport shareholders to chew on. Underlying aircraft demand seems strong, and management has generally been reliable insofar as being careful about adding capacity ahead of real demand. With the Omni deal, Air Transport will also have a more stable block of revenue coming from the Department of Defense, as well as some longer-term fleet management options. Although these shares do seem undervalued, I’ve lowered my expectations and this is a tough stock to model given the substantial uncertainties in the business.

Click here for more:
Air Transport Group Shareholders Have A Lot To Consider

Air Transport Group: Warning, Contents Have Shifted In Flight

Air Transport Group (ATSG) has chosen to alter its business in a pretty significant way with the $845 million acquisition of Omni Air. With this acquisition, Air Transport will be far more exposed to passenger-oriented ACMI and charter services, and the company will also add Boeing (BA) 777s to its owned and operated fleet.

I’m not unreservedly bullish about this deal, as I believe it adds operating complexity to a company that already had a track record of so-so execution in its core operations. It also likely takes an Amazon (AMZN) acquisition off the table (however likely that really was) and could lead Amazon to turn more toward Atlas (AAWW) as its provider of choice for future air cargo expansion needs. Adding government-funded charter services does help mitigate some of the ongoing cargo demand risks, though, and I do believe the shares remain undervalued below the mid-to-high $20’s.

Read the full article here:
Air Transport Group: Warning, Contents Have Shifted In Flight

Air Transport Group Executing, But Headwinds Continue To Weigh

In terms "controlling what it can control", I believe Air Transport Services Group's (ATSG) management team is doing a good job. Even so, there are worries about Amazon's (AMZN) future plans for its Prime Air operations, possible competitive losses to Atlas Air (AAWW), higher rates, and access to planes continuing to weigh on the shares, which have underperformed Atlas Air quite significantly since March of this year.

I expect Air Transport to expand its business relationship with Amazon over time, but there are no guarantees. Likewise, I believe the company's efforts to expand its ground-based service and conversion businesses will pay off, but not for several years. Although the overall air cargo and leasing environment remains healthy, escalating trade disputes could threaten that and Air Transport doesn't have a great track record of free cash flow or ROIC generation. That said, there still appears to be worthwhile opportunity here for those investors who can get comfortable with the risks.

Continue here:
Air Transport Group Executing, But Headwinds Continue To Weigh

Air Transport Services Group Seems To Have Found A New Cruising Altitude

“It's different this time” is probably one of the most expensive phrases in the history of investing (although “what could possibly go wrong?” might be a close second), as it often represents a period of peak optimism that lures in investors right before the company/industry snaps back to reality. On the other hand, failing to notice and accept a new fundamental reality can also be pretty expensive, as it means you may stand forever on the sidelines watching a great story go by.

That brings me to Air Transport Services Group (ATSG) – a company and stock that I have liked for some time that may actually be seeing a fundamental transformation in its business. While I liked the shares a year ago, I didn't really expect another 50%-plus move in the shares. The company's bull case has materialized, though, as demand for its freight aircraft has picked up and the company continues to build out its fleet.

And now? Historically, this company has had a hard time earning attractive free cash flow and its EBITDA performance has been erratic. I'm nervous about assuming that the next 10 years will be a radical departure from this, but the company's relationship with Amazon (AMZN) is a major driver of change, and the company's e-commerce venture in China could prove very lucrative. I still consider this a high-risk investment (this type of business tends to have a lot of competition, a lot of debt, and relatively low returns), but a fair value in the low $20's does not seem crazy to me today.

Read more here:
Air Transport Services Group Seems To Have Found A New Cruising Altitude

Even After A Big Run, Atlas Air May Have More To Give

I didn't go into my latest round of due diligence on Atlas Air (NASDAQ:AAWW) expecting to find a bargain. While the shares couldn't sustain the spike brought about earlier in 2016 with a major agreement with Amazon (NASDAQ:AMZN), the shares did start a strong rally toward the end of summer, and the shares rose another 25% or so after the U.S. presidential election (despite the uncertain ramifications of the new administration's policies on international trade). And yet, while there are a lot of unknowns about future margins and the air cargo supply/demand balance still isn't great, these shares just might still be too cheap.

Continue here:
Even After A Big Run, Atlas Air May Have More To Give

Seeking Alpha: Air Transport Services Group Ready To Take Off

I liked the direction of Air Transport Services Group (NASDAQ:ATSG) back in April, as the company had taken steps to reduce some of the contract risks with its huge DHL business, was building business with the likes of Cargojet (OTC:CGJTF) and West Atlantic, and was about to begin repurchasing shares. What I didn't like so much was the valuation, and with the shares basically flat since then (up 2% against a 1% decline in the S&P 500), I don't feel like I've missed out on all that much.

There are some legitimate areas of concern in the global airfreight market. Airfreight volumes are up for the year, but have been outpaced by capacity growth and it's hard to find much optimism regarding the health of the U.S. or Chinese economies. That said, Air Transport's regional focus is an important differentiator, as it gives the company exposure to e-commerce growth, and the company's efforts to diversify its business seem to be on a good track. I wish my fair values weren't so closely aligned with the sell-side consensus, but I do think fair value for these shares lies between $11 and $12 today and supports an interesting value opportunity.

Read more here:
Air Transport Services Group Ready To Take Off

Seeking Alpha: Air Transport Group Delivering On Schedule

Sane and rational competition is a good thing for most industries, but especially for the operators of aircraft. While domestic passenger airlines like Delta (NYSE:DAL) and Alaska Air (NYSE:ALK) have taken advantage of improved conditions to post some good results, so too have conditions improved for freight/air cargo operators like Air Transport Services Group (NASDAQ:ATSG). In the case of ATSG, though, it's not just about a better overall operating environment, as the company's internal expense and capital management efforts have started to pay off as well.

Air Transport's shares have done alright since my last article, boosted (I think) by more optimism around the air cargo space and growing expectations that the company would start returning cash to shareholders in 2015. The 11% move in the shares since that September piece has just slightly outdone FedEx (NYSE:FDX) and outpaced the S&P 500, but has lagged Atlas Air (NASDAQ:AAWW) which has climbed about 25% in that time. With the rise in Air Transport shares, I'm not as bullish as I was before. I still think there is room for the company to outperform and an argument for a share price in the low double-digits, but a mid-teens undervaluation isn't quite enough to get my wholehearted bullishness today.

Continue here:
Air Transport Group Delivering On Schedule

Seeking Alpha: Air Transport Group Looking To Recover From A Choppy Start To The Year

In a time when it seems that almost any stock has gone up, Air Transport Group's (ATSG) 13% decline since my last write-up is particularly disappointing. I continue to believe that this is a well-run air cargo company with meaningful opportunities to improve EBITDA and cash flow, but management must convert "opportunity" to results for this stock to perform better. A couple of recent developments should encourage bulls, and the stock remains at a valuation where I think a closer look is warranted.

Read more here:
Air Transport Group Looking To Recover From A Choppy Start To The Year

Seeking Alpha: Air Transport Group Looking To Post Meaningfully Higher Cash Flow

Done correctly, equipment leasing can be a lucrative business. General Electric's (GE) GE Capital has done quite well for itself leasing everything from jet engines to rail cars to shipping containers, and passenger jet lessors Aircastle (AYR) and AerCap Holdings (AER) have likewise performed quite well over the past year and reasonably well over the last five.

Air Transport Group (ATSG) isn't a straight-up leasing company, as about 80% of the company's external revenue comes from ACMI (aircraft, crew, maintenance, insurance) operations, but the stock has nevertheless been quite strong both over the past year and since a 2008/2009 crisis threatened the company's survival. With the company looking to generate business for under-utilized assets in an improving economy and taking a new, disciplined approach to further capex, Air Transport Group should be looking at a period of improving margins and cash flows.

Please continue here:
Air Transport Group Looking To Post Meaningfully Higher Cash Flow

Investopedia: FedEx May Be In Sight Of Bargain Pricing

I've been a FedEx (NYSE:FDX) skeptic for some time now, and despite a few spikes in February and March, the stock has mostly chopped around in 2012 as investors try to digest the impact of slowdowns in Europe and China on global transportation. Although I still believe that FedEx enjoys too much benefit of the doubt with the sell-side analyst crowd, I do acknowledge the value in this company's nearly impossible-to-replicate infrastructure and its leverage to an eventual economic recovery. Overall, maybe FedEx is getting within sight of being attractively valued.

Please read more here:
http://www.investopedia.com/stock-analysis/2012/FedEx-May-Be-In-Sight-Of-Bargain-Pricing-FDX-AAWW-ATSG-UNP0919.aspx

Investopedia: UTi Worldwide Sees A Relief Rally

Investors in freight forwarder UTi Worldwide (Nasdaq:UTIW) certainly had little reason to be optimistic going into second quarter earnings. With ocean freight rates pressuring margins and air cargo demand falling, earnings expectations had been drifting lower for weeks. Then when FedEx (NYSE:FDX) warned of a disappointing quarter it was not hard to think that investors were bracing themselves for this report.

Consequently, when UTi Worldwide reported a quarter that wasn't all that terrible on Thursday, the stock enjoyed a good pop. Although the stock remains undervalued on a long-term basis, it's going to take real improvement in the underlying markets (and not just relief rallies) for this stock to work.

Please click the link to continue reading:
http://www.investopedia.com/stock-analysis/2012/UTi-Worldwide-Sees-A-Relief-Rally-UTIW-EXPD-FDX-AAWW-ODFL0910.aspx

Investopedia: Air Transport Services - A Riskier Play On A Cargo Recovery

Investors know that transport stocks can be a good way to play fundamental macroeconomic trends; North American railroads like Union Pacific (NYSE:UNP), for instance, have done quite well since the United States economy started to pull out of the recession. Likewise, the recent malaise in the global economy (particularly Europe and China) has done no great favors for international cargo carriers like UPS (NYSE:UPS) and FedEx (NYSE:FDX).

Air cargo has definitely stagnated of late. While conditions haven't seen the crisis levels that some seaborne shippers have seen, companies like Hong Kong Airlines and Cathay Pacific have seen significant declines in cargo volumes and have been cutting back on capacity. This is bad news for air cargo players like Atlas Air (Nasdaq:AAWW) and Air Transport Services Group (Nasdaq:ATSG) as well, but the question remains whether this market will rebound later this year. While I recently highlighted Atlas Air as a worthwhile stock to consider as a late 2012 rebound play, more aggressive investors may also want to consider Air Transport Services.

To read the full story, please click here:
http://www.investopedia.com/stock-analysis/2012/Air-Transport-Services---A-Riskier-Play-On-A-Cargo-Recovery-ATSG-FDX-UPS-AAWW0830.aspx

Investopedia: Will A Q4 Rebound Lift Atlas Air Worldwide?

China continues to sneeze, and it has given industrial stocks in North America and Europe a pretty nasty summer cold. That's bad news for air cargo carriers like FedEx (NYSE:FDX) and Atlas Air Worldwide (Nasdaq:AAWW), which depend on strong cargo demand to and from Asia. While overall industrial demand in China is not looking strong yet, nor are current cargo trends in Hong Kong, there may yet be reasons to think that stronger demand late in the year can lift shares of Atlas Air.

Continue here for more:
http://stocks.investopedia.com/stock-analysis/2012/Will-A-Q4-Rebound-Lift-Atlas-Air-Worldwide-AAWW-FDX-UPS-AAPL0822.aspx

Investopedia: Atlas Air Offering A China Recovery Play

Commentators talk about "the transports" as though they were an undifferentiated block of companies that all move together. Really, nothing could be further from the truth. While railroads, trucking, shipping and air cargo all involve moving things from A to B, the details differ in crucial ways.

Said another way, there's precious little correlation between companies like Old Dominion (Nasdaq:ODFL), Union Pacific (NYSE:UNP) and Atlas Air (Nasdaq:AAWW), and shares of the latter have languished on a host of worries including the state of the Chinese economy. With better-than-expected results in the first quarter though, and an apparent undervaluation, it may be worth taking a closer look at these shares as a second half rebound story.

Read more here:
http://stocks.investopedia.com/stock-analysis/2012/Atlas-Air-Offering-A-China-Recovery-Play-AAWW-FDX-UPS-BA0507.aspx

Investopedia: At FedEx, Fundamentals Don't Seem To Matter

It is interesting to me that Wall Street seemingly ignores some of the big problems at FedEx (low free cash margins, high ongoing capex needs, mediocre returns on capital) in favor of its charms as a leveraged play on economic growth. I don't doubt the value of FedEx's expensive-to-replicate global infrastructure, nor the potential to wring better performance from international operations, but it feels like that has been the story at FedEx for a long, long time.

Decent Third Quarter Results  
All things considered, FedEx did pretty well in its fiscal third quarter. Revenue rose 9%, more or less in line with most analyst estimates, with 8% growth in the large Express business boosted by 14% growth in Ground and 10% growth in Freight. Volumes were a mixed bag (down 4% in domestic Express, down 1% in International Priority but up 2% in Freight and 5% in Ground), but pricing was pretty strong across the board.

Read more here:
http://stocks.investopedia.com/stock-analysis/2012/At-FedEx-Fundamentals-Dont-Seem-To-Matter-FDX-UPS-ODFL-ATSG-AAWW0323.aspx

Investopedia: Air Transport Group Offers A Value Conundrum

What is Air Transport Group (Nasdaq:ATSG) really worth? It sounds like a straightforward question, but it is really anything but straightforward. While there are certainly several positive aspects to this business, and legitimate reasons for thinking it undervalued, there are also several significant drawbacks and concerns about the long-term economic returns from the business model.

Air Freight a Bumpy Growth Story  
It likely will not surprise anyone that air freight is typically the most expensive way of shipping products, particularly those with low value-to-weight ratios. Said differently, nobody would think of shipping coal, frozen chicken breasts or family sedans by cargo plane - that's what rail, trucks and ocean-going cargo ships are for.

Click this link for more:
http://stocks.investopedia.com/stock-analysis/2012/Air-Transport-Group-Offers-A-Value-Conundrum-ATSG-FDX-UPS-AAWW0104.aspx

Investopedia: October Rail Data - A Tale Of 2 Economies

There is no question that times are still very hard for many people. Unemployment hovers in the 9% range, foreclosures and a depressing housing market weigh on many communities, and nobody seems to feel especially comfortable with where the economy is at. And yet, if you look at the rail data from the American Association of Railroads' "Rail Time Indicators," there are more signs of strength than you might imagine. While many (if not all recessions) seem to break some prior rule about what can, or cannot happen, in prelude to a recession, it is hard to see how recent data out of the transports is indicative of an economy toppling over.

October's Data  
After a rough patch in the spring and summer, it looks like rail traffic is back on the right direction. In the U.S., rail carloads rose 1.7% from the prior year and 0.5% from September. Excluding coal, the year-over-year growth was 2.1% and excluding coal and grain, the figure jumps to a healthy-looking 5.2%. Traffic levels are now closer to the peak year of 2006 than the trough year of 2009 - encouraging to those who will see further room for growth and perhaps discouraging to those who might ask "are things really better?"

Read more here:
http://stocks.investopedia.com/stock-analysis/2011/October-Rail-Data--A-Tale-Of-2-Economies-UNP-CSX-NSC-CP-GWR-JBHT-AAWW1107.aspx

Investopedia: A Confusing Quarter From FedEx

Sometimes, what a company reports about its quarter means everything for the performance of the stock. In other cases, Wall Street decides to use a quarterly report as a launching pad for a broader verdict on an entire sector or theme. That would seem to be the case at FedEx (NYSE:FDX); while the quarter arguably was not as strong as the headline numbers suggest, the market reaction would seem to be a broader vote on the near-term outlook for the global economy.

Fiscal Q1 - Not as Good as it Seems?
On the surface, it looks like FedEx did what it had to do this quarter. Revenue rose more than 11% and surpassed the average estimate, and the company showed fairly solid operating leverage. Still, there were some "yeah, buts" this quarter.

Within the top line number, express revenue rose more than 11%, but volume was barely positive. Domestic package volume was actually down and international priority volume was surprisingly weak (down about 4%). Ground revenue looked solid (up 16%) and volume was decent, but freight revenue was up only about 6% despite a nearly 13% increase in yields (that is, pricing).


Read more at this link:
http://stocks.investopedia.com/stock-analysis/2011/A-Confusing-Quarter-From-FedEx-FDX-UPS-FWRD-AAWW-ATSG-NSC-ODFL0926.aspx

Investopedia: J.B. Hunt - A La Intermodal

Despite concerns about economic activity, railroad volume, shipping container volume and the health of the trucking industry, goods are still getting shipped around the country and more and more of that shipping is being handled by intermodal carriers. That puts J.B. Hunt (Nasdaq:JBHT) in the driver's seat, and the company is certainly delivering strong results. 

Good Second Quarter Results, With a Catch  
In many respects J.B. Hunt had a great quarter. Operating revenue was up nearly 22% and, even excluding fuel surcharges, leaves 14% revenue growth. The company's intermodal business was the leader; growing 29% this quarter and making up nearly 60% of operating revenue. The company's dedicated contract services business also did well, with growth of 15%. Trucking was the laggard, coming in with just 4% revenue growth this period. 


To read more, please follow the link:
http://stocks.investopedia.com/stock-analysis/2011/J.B.-Hunt-A-La-Intermodal-JBHT-BRK.A-NSC-UPS-FDX-AAWW-ODFL0720.aspx