NEW YORK ( TheStreet) -- Air Transport Services Group (Nasdaq: ATSG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally poor debt management and disappointing return on equity.

Highlights from the ratings report include:
  • ATSG's revenue growth has slightly outpaced the industry average of 9.3%. Since the same quarter one year prior, revenues rose by 16.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $28.34 million or 27.72% when compared to the same quarter last year. Despite an increase in cash flow of 27.72%, AIR TRANSPORT SERVICES GROUP is still growing at a significantly lower rate than the industry average of 82.60%.
  • The debt-to-equity ratio of 1.07 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, ATSG has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Air Freight & Logistics industry and the overall market, AIR TRANSPORT SERVICES GROUP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

Air Transport Services Group, Inc., through its subsidiaries, provides aircraft for lease, airline operations, and other related services primarily to the shipping and transportation industries. It leases aircraft to airlines and other customers. The company has a P/E ratio of 15.5, below the average transportation industry P/E ratio of 15.9 and below the S&P 500 P/E ratio of 17.7. Air Transport Services Group has a market cap of $337 million and is part of the services sector and transportation industry. Shares are down 31.6% year to date as of the close of trading on Monday.

You can view the full Air Transport Services Group Ratings Report or get investment ideas from our investment research center.
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