Cargojet Q3 Revenue Rises 17%; Shares Dip

Cargojet (CJT), a Canadian airline specializing in scheduled cargo flights, reported higher revenue and adjusted EBITDA in the third quarter of 2021 than a year ago. The company continued its revenue diversification strategy, and is more diversified today than before the pandemic. 

Total revenues for Q3 2021 came in at C$189.5 million, an increase of 16.8% from C$162.3 million the prior-year quarter. Revenue growth was driven by the ACMI business line which posted strong revenue growth of 21% year-over-year. Domestic network revenues for the quarter represented less than 42% of total revenues, compared to more than 54% for the same quarter in 2019. 

Gross margin was C$54 million in the third quarter compared to C$58.3 million a year ago. Adjusted EBITDA was C$70.9 million for the quarter ended September 30, compared to an adjusted EBITDA of C$69.8 million in the prior-year quarter. 

Adjusted free cash flow was C$51.1 million in the quarter, compared to C$59.3 million in the same period in 2020. 

Cargojet President and CEO Dr. Ajay Virmani said, “Ocean and ground transportation supply-chains remain clogged across the globe creating short-to-medium term opportunities for air-cargo. We are seeing that reflected in our ACMI business and expect this to extend through the upcoming holiday season.

“As economies and businesses re-open, Consumers are keen to step out and experience in-person shopping. But our longer-term outlook for e-Commerce remains strong, particularly given the dramatic uplift in digital adoption over the past 18 months.” 

Over the past few quarters, the company has methodically invested in the talent, infrastructure and aircraft needed to build a strong international business, and is starting to see encouraging results. (See Insiders’ Hot Stocks on TipRanks)

On October 25, Canaccord Genuity analyst Matthew Lee maintained a Buy rating on CJT and set a price target of C$240. This implies 27.1% upside potential). 

The rest of the Street is bullish on CJT, with a Strong Buy consensus rating based on five Buys and one Hold. The average Cargojet price target of C$241.68 implies 28% upside potential to current levels.  

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