Atlas Corp (ATCO) delivered better-than-expected Q3 2021 results as operations remained unaffected by supply chain disruptions. Revenue and funds from operations topped consensus estimates due to a resilient business model focused on long-term contracted cash flows.
Atlas Corps is a global asset manager that specializes in deploying capital across multiple sectors to create growth opportunities. It operates through the Seaspan segment, which owns and operates containerships. The APR segment provides mobile power solutions.
Revenue in the quarter was up 17% year-over-year to $451.9 million, exceeding consensus estimates of $404.3 million. The increase was driven by higher average charter rates of existing vessels and the contribution of six secondhand vessels. (See Insiders’ Hot Stocks on TipRanks)
Funds from operations (FFO) grew 42.9% year-over-year to $248 million as funds from operations per share grew 36.8% year-over-year to $0.93, exceeding consensus estimates of $0.33. Atlas Corp also delivered adjusted earnings per diluted share of $0.56, up 107.4% year-over-year.
According to CFO Graham Talbot, Q3’s performance affirms strong execution across the organization and the strength of a highly differentiated platform. During the quarter, significant milestones were achieved, including securing funding for a newbuild program. The company has already secured funding for 60 vessels, with the remaining 10 vessels on track.
In addition, Atlas Corp tapped the U.S. institutional unsecured bond markets and issued a $750-million bond amid strong investor demand.
Citigroup Analyst Christian Wetherbee reiterated a Hold rating on the stock with a $16 price target implying 13.2% upside potential to current levels. According to the analyst, the valuation represents Atlas Corp’s growth outlook.
Consensus among analysts is a Hold based on one Buy and three holds. The average Atlas Corp price target of $16.50 implies 16.8% upside potential to current levels.