Last Update 07 Mar 26

Fair value Increased 2.94%

CJT: Higher Execution Expectations Will Support Future Upside And Dividend Momentum

Cargojet's analyst fair value estimate has been revised higher from CA$113.21 to CA$116.54, reflecting a series of raised Street price targets as analysts factor in updated expectations for revenue growth, margins and forward P/E assumptions.

Analyst Commentary

Recent Street research has centered on higher price targets for Cargojet, with several firms revising their views while keeping existing ratings intact. These updates help frame how analysts are thinking about the balance between valuation, execution risk and future growth potential.

Bullish Takeaways

Bullish analysts have raised their price targets into a range around C$118 to C$126, which sits above the current fair value estimate of C$116.54 and signals confidence that the market could support a higher valuation if Cargojet executes on its plans.
The move from C$100 to C$120 and from C$118 to C$126 suggests bullish analysts are comfortable assigning more generous P/E assumptions, likely tied to expectations around revenue growth and margin sustainability already reflected in the updated fair value model.
Higher targets from multiple firms around the same time point to broad interest in the story, which can support trading liquidity and investor attention as the company works to deliver on its growth and efficiency initiatives.
The step up in targets by increments such as C$10 and C$15 indicates that bullish analysts are fine tuning rather than overhauling their models. This can be reassuring if you are looking for consistent, incremental thesis support.

Bearish Takeaways

Some analysts maintain ratings like Market Perform even as they lift targets from C$90 to C$94, which implies they see value closer to current levels and are more cautious about meaningful upside beyond their revised estimates.
The presence of both Buy and non Buy ratings alongside higher targets shows that not everyone is aligned on risk and reward, so execution on growth and margin assumptions remains a key watchpoint.
Target increases such as C$115 to C$118 sit closer to the fair value estimate of C$116.54, hinting that a portion of the Street views the shares as more fairly valued, with less room for error if company performance does not match expectations.
Because all the changes are in the direction of higher targets, bearish analysts may focus more on what is already priced into these assumptions, especially around future growth and the durability of Cargojet’s earnings base.

What's in the News

Cargojet declared a cash dividend of CA$0.385 per common voting and variable voting share for the period from January 1, 2026 to March 31, 2026, for shareholders on record as of March 20, 2026, with payment on or before April 2, 2026 (Key Developments).
The declared dividend amount for this period is CA$0.035 higher per share than the previous quarter, which represents a 10% change in the quarterly dividend level (Key Developments).
The company stated that these dividends will be treated as eligible dividends under the Income Tax Act of Canada, which can matter for after tax outcomes if you hold the shares in a taxable account (Key Developments).

Valuation Changes

Fair Value: CA$113.21 to CA$116.54, a modest move higher that aligns the model with updated assumptions across growth, margins and P/E.
Discount Rate: 8.12% to 8.13%, a very small adjustment that leaves the overall risk assumption largely unchanged.
Revenue Growth: 2.07% to 3.70%, a higher long term growth input that plays a central role in the higher CA$116.54 fair value outcome.
Net Profit Margin: 5.70% to 5.96%, a slight uplift that supports a bit more earnings power in the outer years of the model.
Future P/E: 30.66x to 29.05x, a lower multiple that partly offsets stronger CA$ revenue and margin assumptions while still supporting a higher fair value.

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Key Takeaways

Renewed long-term partnerships and strong domestic e-commerce growth drive higher revenue stability and earnings predictability.
Network expansion and fleet modernization boost operational efficiency, margin improvement, and diversified global revenue streams.
Heavy reliance on key customers, rising costs, operational declines, and global uncertainties threaten revenue stability, margin resilience, and long-term international growth prospects.

Catalysts

About Cargojet

Provides time-sensitive overnight air cargo services and carries in Canada.What are the underlying business or industry changes driving this perspective?

Renewal and extension of long-term contracts with major partners Amazon (to potentially 2031) and DHL (to potentially 2037, with growth-oriented incentives) enhance future revenue visibility and position Cargojet to benefit further as these global customers expand, potentially supporting multi-year top line growth and greater earnings predictability.
Sustained and accelerating domestic e-commerce demand-evidenced by 14% year-over-year domestic revenue growth and strong results during major events like Amazon Prime Week-points to ongoing volume expansion and improved capacity utilization, directly benefiting revenue and EBITDA margins.
The company's dominant overnight air network in Canada and an expanding international footprint, including China-scheduled charters and growth agreements with DHL, position Cargojet to capitalize on shifting global trade patterns and new route opportunities, diversifying and potentially increasing revenue streams over the long term.
Fleet modernization and harmonization efforts (selling older, less efficient aircraft and integrating more standardized models) are expected to reduce maintenance costs, improve operational reliability, and optimize asset utilization, supporting higher net margins and return on invested capital in future periods.
Implementation of operational efficiency and technology initiatives ("work smarter" culture, new technology transformation project, and optimized sales/backhaul strategies) are already driving higher adjusted EBITDA margins and are likely to further enhance cost discipline and working capital efficiency, with positive impacts on future net margins and earnings.

Cargojet Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Cargojet's revenue will grow by 3.7% annually over the next 3 years.
Analysts assume that profit margins will shrink from 14.2% today to 9.7% in 3 years time.
Analysts expect earnings to reach CA$111.6 million (and earnings per share of CA$8.49) by about September 2028, down from CA$145.7 million today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as CA$152 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.4x on those 2028 earnings, up from 10.3x today. This future PE is greater than the current PE for the CA Logistics industry at 10.3x.
Analysts expect the number of shares outstanding to decline by 4.88% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.51%, as per the Simply Wall St company report.

Cargojet Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Cargojet remains highly dependent on a small number of major customers, especially Amazon and DHL; a loss, renegotiation at less favorable terms, or reduced volumes from these key contracts would materially impact revenue stability and earnings.
Large capital expenditures required to modernize and rationalize the fleet, along with ongoing investments in technology and training, continue to pressure free cash flow and could limit the company's ability to return capital to shareholders.
Block hours (a key operational metric) have seen double-digit year-over-year declines, with management commenting on global uncertainties, trade realignment, and softness in certain international routes like Europe and China; persistent weakness or further volatility in these trade lanes would weigh on top-line growth and asset utilization rates.
Rising industry-wide labor costs and potential chronic labor shortages, noted with previously "ramped-up" pilot hiring and training costs, could lead to higher operating expenses and margin compression, especially if labor markets remain tight in aviation and logistics.
The company acknowledges macroeconomic headwinds such as global trade uncertainty, shifting trade policies, and possible changes in consumer spending; these factors introduce sustained risk to long-term international revenue growth and could further increase earnings volatility.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of CA$144.833 for Cargojet based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$170.0, and the most bearish reporting a price target of just CA$98.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CA$1.1 billion, earnings will come to CA$111.6 million, and it would be trading on a PE ratio of 19.4x, assuming you use a discount rate of 7.5%.
Given the current share price of CA$99.65, the analyst price target of CA$144.83 is 31.2% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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