Air Canada (TSX:AC) is a stock that should require no introduction for Canadian readers. The Montreal-based company is the largest commercial airliner operating in Canada. It provides domestic, United States, and international airline services. This top Canadian growth stock has experienced its fair share of dizzying highs and white-knuckle turbulence over the last 15 years.
Today, I want to discuss how much you would have today if you invested $5,000 in Air Canada at this time in 2011. Let’s jump in.
How has this top growth stock performed over the past year?
Shares of Air Canada have climbed 5.5% month over month as of early morning trading on June 26. This growth stock is now up 20% so far in 2023. Investors can look at the roller coaster that has been its trajectory with the interactive price chart below.
Air Canada stock closed at $2.29 on June 24, 2011. Before we explore how much our $5,000 investment would be worth today, let’s look at the tests this company has faced and dive into its recent earnings.
Air Canada has faced two major tests over the past decade
The 2007-2008 financial crisis shook global markets and plunged the world into the worst economic retreat since the Great Depression. Airliners were some of the biggest losers when the downturn reached its worst point. Indeed, there were concerns that Air Canada could be on its last legs, as it suffered five straight years of losses. Fortunately, solid leadership and a broader rebound allowed the airline to storm back and establish itself as a premier Canadian company once again.
Canada’s top airliner was riding high in the beginning of 2020. The stock has reached an all-time high and the company was delivering record profits. Air Canada saw its business grind to a halt as the COVID-19 pandemic disrupted economies around the world. The company predicted that it would take three years to recover from the ill effects of the global pandemic. However, it has managed to beat its own projections.
Should investors be happy with its recent earnings?
Air Canada released its first-quarter fiscal 2023 earnings on May 12. The company delivered record first-quarter passenger revenues of $4.08 billion, which was more than double the passenger revenues it posted in the first quarter of fiscal 2022. Meanwhile, first-quarter operating revenues surged 90% year over year to $4.88 billion.
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. This company reported adjusted EBITDA of $411 million of in the first quarter of fiscal 2023 — up from an adjusted EBITDA loss of $143 million in the previous year. Moreover, Air Canada delivered an adjusted EBITDA margin of 8.4%.
For the rest of fiscal 2023, Air Canada forecasts adjusted EBITDA between $3.5 billion and $4.0 billion.
Here’s how much your $5,000 investment in 2011 would be worth right now
Looking back to June 24, 2011, we could purchase 2,183 shares of Air Canada for a total price of $4,999.07. Shares of Air Canada were trading at $22.92 per share in early morning trading on June 26. Those same 2,183 shares would be worth $50,034.36. That means our original investment would have netted over $45,000 in capital growth over the 12-year period.
Air Canada is still trading in favourable value territory compared to its industry peers at the time of this writing. Moreover, it is geared up for strong earnings growth going forward. I’m still bullish on this exciting growth stock today.
