CJT:CC - Up 53% From its 52-Week Low Is Cargojet Stock Still a Buy?

2024-03-28 10:30:00 ET

Shares of Cargojet ( TSX:CJT ) continue to climb this year after bottoming out with the market back in October. However, the question now is whether the climb is deserved. To find that out, let’s look at what’s been going on with Cargojet stock and what’s likely been causing the run.

Earnings

While first-quarter earnings are around the corner, it seems that the last few quarters were what have been driving share prices higher and higher. During the third quarter, Cargojet stock reported total revenue of $214 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $70 million. Both were down from the year before.

However, the fourth quarter saw an improvement from those levels. Revenue rose to $254.7 million in the fourth quarter, with adjusted EBITDA climbing as well to $81.6 million. So, while the company still reported a net loss of $34.9 million, there were clear improvements quarter over quarter.

Furthermore, Cargojet stock emphasized a continued focus on cost management and preparation during this ongoing economic uncertainty. Investors were again pleased by this, even with the lower performance on a year-over-year level.

Why the loss?

Now, of course, we can’t focus entirely on a rosy picture here. Cargojet stock did experience a fairly significant loss after all. This was due to a combination of declining consumer demand and higher inflation, all causing the company to pull back on growth plans.

Those growth plans were all well and good during the pandemic, when Cargojet stock saw a huge surge in revenue as demand increased. Since then, as mentioned, the company has to pull back on its costs. Yet even so, Cargojet stock does anticipate mid- to high single-digit revenue growth for 2024 as a whole.

Analysts weigh in

There was a drop after earnings, but shares of Cargojet stock continued to pick up higher and higher. Now, it’s trading nearing 52-week highs! This likely comes down to analysts weighing in on what they see as an undervalued stock.

Cargojet stock now seems to be a solid value stock amidst ongoing macroeconomic pressures. The positive outlook of growth and margin expansion, in particular during this year, is something that investors should latch onto. In fact, analysts were quite optimistic about the overall future of the company.

So, while Cargojet stock did fall below analyst estimates from unexpected adjustments, management’s confidence in improving volume tends to create optimism among analysts. In fact, even with a loss, many analysts increased their potential price target for the stock!

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Why? Many investors may not remember the partnerships that Cargojet stock enjoys. These include companies like DHL Logistics and Amazon . As gains increase from these partnerships, the company should continue to see a rise in revenue. All that will likely mean a rise in share price as well.

Bottom line

There are likely to be a few more hiccoughs in the coming year for Cargojet stock. But it’s unlikely to keep the stock down for good. And with shares rising higher in an improving market, now could be a great time to pick up Cargojet stock on the recovery.

The post Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy? appeared first on The Motley Fool Canada .

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Amy Legate-Wolfe has positions in Cargojet. The Motley Fool has positions in and recommends Cargojet. The Motley Fool recommends Amazon. The Motley Fool has a disclosure policy .

2024