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Why Atlas Air Worldwide (AAWW) Is Down Today

Stocks in this article: AAWW

NEW YORK (TheStreet) -- Atlas Air Worldwide (AAWW) fell 6.9% to $31.43 Wednesday after the company announced it expects earnings to drop by 70 cents a share in 2014.

The company expects earnings to decline in 2014 due to scaled down U.S. military activity overseas. With the exception of the decline, Atlas Air expects 2014 results to approximate 2013 results.

For the fourth quarter Atlas Air posted earnings of $1.66 a share, 22 cents better than Capital IQ Consensus Estimate of $1.44 a share. Revenue rose 3.9% to $470.6 million in the quarter, compared to analyst estimates of $434.9 million.

Must read: What's Behind Atlas Air Worldwide's (AAWW) Fall on Friday?

TheStreet Ratings team rates ATLAS AIR WORLDWIDE HLDG INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate ATLAS AIR WORLDWIDE HLDG INC (AAWW) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Air Freight & Logistics industry and the overall market on the basis of return on equity, ATLAS AIR WORLDWIDE HLDG INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • AAWW, with its decline in revenue, slightly underperformed the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Air Freight & Logistics industry. The net income has significantly decreased by 29.9% when compared to the same quarter one year ago, falling from $33.86 million to $23.74 million.
  • The debt-to-equity ratio of 1.36 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, AAWW maintains a poor quick ratio of 0.91, which illustrates the inability to avoid short-term cash problems.
  • You can view the full analysis from the report here: AAWW Ratings Report

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