Why Cargojet Stock Jumped 10% on Tuesday

Cargojet (TSX:CJT) stock jumped 10% after reporting earnings that soared past estimates, with more potentially to come.

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Cargojet (TSX:CJT) shares were up 10% from Monday’s share price as the cargo airline came out with earnings that surged past estimates. The stock finally reported some great news after several quarters of underperformance. So, let’s look at what happened and whether Cargojet stock can keep it going.

What happened?

Shares of Cargojet stock climbed as the company announced first-quarter results that soared past estimates. The stock reported earnings per share (EPS) of $1.86, which was more than double the expected $0.66 EPS.

The first quarter also saw total revenue of $231.21 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) hit $75 million as well, with net earnings for the quarter at $35 million. 

This was a major improvement from the last few quarters, which can clue in that perhaps Cargojet stock is undergoing some strong momentum. The third quarter saw total revenue at $214 million, with adjusted EBITDA at $70 million. By the fourth quarter, total revenue reached $221.9 million, with adjusted EBITDA at $81.6 million. Furthermore, it still operated at a net loss at $34.9 million.

The fact the company now reports a profit and has seen strong momentum with EPS climbing so high should, therefore, interest investors. But there have been a few items that should be on their radar.

Will it last?

The key is whether this growth will last. To look at this, the company discussed several ongoing reasons that could affect the company’s share price. Cargojet stock noted in particular the ongoing conflict in Ukraine and the Red Sea.

Global conflicts have pushed companies to seek alternate transit routes instead of using shipping freight. Air freight and plane leasing saw net earnings rise. The company also supports relief missions in Ukraine and the Middle East.

However, uncertainty about short-term consumer spending, of course, still weighs on Cartgojet stock, which is why the company remains focused on cost cutting as well. There is cautious optimism, but geopolitical uncertainty can lead to the potential for supply-chain disruptions.

Lasting growth

The lasting growth will then be in the area where Cargojet stock has focused for the last year. That would be its focus on domestic operations after abandoning its plans to expand internationally. Instead, the company announced back in January it would scale back its fleet growth. This included no longer purchasing four airliners and selling four other aircraft last quarter.

“We further optimized our fleet and flight schedules; combined with an encouraging increase in volumes, we are starting to see the margin improvements we have been working on since 2023,” Co-Chief Executive Officer Jamie Porteous said in a statement.

With more efficiencies across every aspect of the business, shareholders could be witnessing the beginning of growth for Cargojet stock once more. So, with shares up 10% after earnings and offering a 1.09% dividend yield, now could be the time to consider adding Cargojet stock to your watchlist once more.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in Cargojet. The Motley Fool has positions in and recommends Cargojet. The Motley Fool has a disclosure policy.

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