Cargojet Inc CGJTF

Primary Symbol: T.CJT Alternate Symbol(s): T.CJT.DB.F | T.CJT.DB.E

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Cargojet Inc. is a Canada-based provider of time sensitive air cargo services to all major cities across North America, providing dedicated, aircraft, crew, maintenance and insurance (ACMI) and international charter services. The Company's main air cargo business is comprised of operating a domestic network air cargo co-load network between sixteen major Canadian cities and providing dedicated aircraft to customers on an ACMI basis, operating between points in Canada, the United States, Mexico, South America, Asia and Europe. It also operates scheduled and ad hoc international routes for multiple cargo customers between United States and Bermuda, between Canada, United Kingdom and Germany; between Canada and Asia; and between Canada and Mexico. Its charter services include Go Now, dangerous goods, heavy & oversized cargo, humanitarian and relief, remote destinations, automotive, and oil and gas. The Company operates its network with its own cargo fleet of approximately 41 aircraft.

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Cargojet Inc

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Post by retiredcfon Jan 31, 2023 9:12am

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January 31, 2023

Cargojet Inc.
Connecting The Dots: CJT flash read-through – UPS Q4 results highlight weakening volumes

TSX: CJT | CAD 121.36 | Outperform | Price Target CAD 247.00

Sentiment: Neutral

CJT – neutral to sentiment. UPS today reported Q4 EPS that came in a touch ahead of consensus expectations. EPS was roughly flat y/y as higher U.S. Domestic Package EBIT (as well as Other Income) was offset by lower International Package. Overall, we view this as a neutral read-through (negative bias) for CJT. While volumes were down in each of UPS' operating segments in Q4, we believe a deteriorating volume outlook is largely baked into CJT's share price at current levels and aligns with commentary from CJT management at conferences earlier this month. While not directly comparable, our negative bias stems from UPS' guide for 2023 revenue down -2% y/y, below our estimate for CJT's Domestic Overnight revenue growth of up +3%. We will be tuning into the conference call later this morning and looking for colour on volume trends in January as well as UPS management expectations for the remainder of the year. We continue to see value in CJT shares at current levels, and believe the long-term FCF potential of the company is underappreciated at current share price levels. See our CJT Q4 preview note here.

What happened? UPS today announced Q4/22 consolidated revenue of $27B, down -2.7% y/y (US Domestic Network Next Day Air revenue was down -1% y/y). Consolidated average daily package volume decreased -5% y/y and US Domestic Next Day Air volume was down -7% y/y. Adjusted diluted EPS came in at $3.62, or up +1% y/y, and above consensus $3.58. The company is guiding to 2023 revenue of between $97.0B and $99.4B (cons. $99.8B).