While Air Transport Services Group, Inc. (NASDAQ:ATSG) might not have the largest market cap around , it received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$14.85 at one point, and dropping to the lows of US$11.78. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Air Transport Services Group's current trading price of US$12.39 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Air Transport Services Group's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is Air Transport Services Group Worth?
According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We've used the price-to-earnings ratio in this instance because there's not enough visibility to forecast its cash flows. The stock's ratio of 16.77x is currently trading slightly below its industry peers' ratio of 20.03x, which means if you buy Air Transport Services Group today, you'd be paying a reasonable price for it. And if you believe that Air Transport Services Group should be trading at this level in the long run, then there's not much of an upside to gain over and above other industry peers. Furthermore, Air Transport Services Group's share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.
What kind of growth will Air Transport Services Group generate?
Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. With profit expected to grow by 37% over the next couple of years, the future seems bright for Air Transport Services Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in ATSG's positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at ATSG? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If you've been keeping tabs on ATSG, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for ATSG, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about Air Transport Services Group as a business, it's important to be aware of any risks it's facing. For example, we've found that Air Transport Services Group has 2 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.
If you are no longer interested in Air Transport Services Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.