When Should You Buy Air Transport Services Group, Inc. (NASDAQ:ATSG)?

While Air Transport Services Group, Inc. (NASDAQ:ATSG) might not have the largest market cap around , it saw a significant share price rise of 21% in the past couple of months on the NASDAQGS. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Air Transport Services Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Air Transport Services Group

What Is Air Transport Services Group Worth?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Air Transport Services Group’s ratio of 54.64x is above its peer average of 23.64x, which suggests the stock is trading at a higher price compared to the Logistics industry. Another thing to keep in mind is that Air Transport Services Group’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

What does the future of Air Transport Services Group look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Air Transport Services Group's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in ATSG’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe ATSG should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on ATSG for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for ATSG, which means it’s worth diving deeper into other factors 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. Our analysis shows 2 warning signs for Air Transport Services Group (1 is a bit concerning!) and we strongly recommend you look at them before investing.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.