Air Transport Service Group’s ATSG bottom line is bolstered by a decrease in operating expenses. Cost-cutting and fleet-upgrade efforts also bode well for the company. Owing to these tailwinds, ATSG shares have performed impressively on the bourse. If you have not taken advantage of its share price appreciation yet, it’s time to do so.

Let’s delve deeper.

Factors Favoring ATSG Stock

Robust Price Performance: A look at the company’s price trend reveals that its shares have risen 10.3% over the past six months, surpassing the industry’s 10.5% decline.

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Northward Estimate Revisions: The Zacks Consensus Estimate for earnings per share has been revised upward by 42.9% over the past 60 days for the upcoming quarter. For the upcoming year, the consensus mark for earnings per share has moved 12% north in the same time frame. The favorable estimate revisions indicate brokers’ confidence in the stock.

Solid Rank: ATSG currently carries a Zacks Rank #2 (Buy).

Bullish Industry Rank: The industry to which Wabtec belongs currently has a Zacks Industry Rank of 94 (out of 251). Such a favorable rank places it in the Top 37% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.

A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.

Growth Factors:  ATSG's unparalleled fleet of in-demand midsized freighters bode well for the company, particularly with its distinctive Lease Plus strategy. In the first half of 2024, Air Transport Service Groupachieved a significant milestone by expanding and extending its flying agreement with Amazon AMZN.

The company plans to operate 10 additional aircraft this year, aiming to be fully ramped up by peak season. This expansion will bring ATSG’s total fleet to 51 767 aircraft flying for Amazon, including 30 leased directly to them. These leases highlight the increasing demand for global air capacity and strengthen the company’s Lease Plus strategy, which offers comprehensive, reliable and flexible leasing solutions for customers worldwide.

Moreover, the company is enhancing its operational efficiency through proactive cost-cutting initiatives. The southward moment in operating expenses is boosting the company’s bottom line. This fall in operating expenses was primarily due to reduced labor costs.

In the second quarter of 2024, the labor costs comprising salaries, wages and benefits accounting for 36% of the total operating expenses fell 4% year over year. The maintenance, material and repairs expenses decreased 7.4% year over year, and the fuel expenses also fell 2.5% year over year.

Other Stocks to Consider

Some other top-ranked stocks for investors’ consideration in the Zacks Transportation sector include C.H. Robinson Worldwide CHRW and Westinghouse Air Brake Technologies WAB.

C.H. Robinson Worldwide currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  CHRW has an expected earnings growth rate of 25.2% for the current year.

The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average surprise of 7.3%. Shares of CHRW have risen 23.4% in the past year.

WAB carries a Zacks Rank #2 at present andhas an expected earnings growth rate of 26% for the current year.

The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missing once. The average beat is 11.8%. Shares of WAB have surged 69.8% in the past year.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report

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