Despite easily beating expectations on the top and the bottom line during its last earnings report in early May, Atlas Air (AAWW) has a rough six weeks in the market. Most of the selloff can be attributed to concerns on slowing worldwide growth and poor guidance from rival Federal Express (FDX) recently. However, the shares are cheaper than they have been for some time and offering long term investors a good entry point at these levels.
"Atlas Air Worldwide Holdings provides outsourced aircraft and aviation operating services in the United States and internationally. The company offers aircraft operating solutions, including aircraft, crew, maintenance, and insurance (ACMI) services." (Business description from Yahoo Finance)
6 reasons AAWW is a solid value play at just under $44 a share:
- The company is selling at just 7 times forward earnings, a solid discount to its five year average (11.2)
- The stock is selling at book value and at 8 times operating cash flow.
- The stock is significantly undervalued judging by consensus price targets. The median price target of the nine analysts that cover the stock is $67 a share.
- Analysts expect revenue growth in the teens for both FY2012 and FY2013. It also has a five year projected PEG of significantly under 1 (.53).
- The company should start to benefit from lower fuel prices. Atlas is projecting that it will have over $9 in free cash flow in FY2012 and a whopping $13 plus a share in FCF in FY2013.
- The stock looks like it is trying to put in a short term technical bottom and trying to bounce from these levels (See Chart)
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAWW over the next 72 hours.