If you’re on the lookout for a stock that’s currently on sale, Cargojet (TSX: CJT) might just be the ticket. This Canadian air cargo company has been quietly delivering impressive financial results. All the while, its stock price has taken a dip, making now a potentially opportune time for investors to take notice. Cargojet’s position as Canada’s leading overnight air cargo provider, combined with its expanding international footprint, gives it a unique advantage in the logistics space, especially as global trade and e-commerce continue to grow.
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The numbers
Cargojet stock’s latest earnings report for the fourth quarter of 2024 revealed a significant surge in both revenue and profitability. The company posted total revenues of $293.2 million for the quarter, up from $221.9 million in the same period the year before. This growth was driven by a 29.8% increase in revenue from its domestic network, ACMI (aircraft, crew, maintenance, and insurance) services, and charter services. These together brought in $250.7 million. For the full year, Cargojet stock surpassed the billion-dollar mark in revenue, reaching $1 billion in total sales — a 14.1% jump from the $877.5 million recorded in 2023.
What’s particularly striking is how Cargojet stock turned its financial performance around. In the fourth quarter alone, the company reported net earnings of $71.2 million. A significant improvement compared to a net loss of $34.9 million in the same quarter of 2023. For the entire year, net earnings came in at $108.4 million, nearly tripling the $37.3 million reported in 2023. This sharp increase in profitability reflects the company’s ability to control costs while capitalizing on higher demand for its services.
Operational efficiency played a significant role in this success. Cargojet stock achieved a 16% growth in block hours flown during the fourth quarter, reflecting increased utilization of its aircraft fleet. This efficiency not only supports current performance but also positions the company well for future growth. By optimizing its operations, Cargojet stock can meet rising demand without the need for significant capital expenditures. This is a crucial advantage in an industry where margins can be tight.
Value to be had
Despite these strong financials, Cargojet stock has been under pressure. As of writing, the stock was trading at $103.67, well below its 52-week high of $144.97. This drop appears disconnected from the company’s underlying performance, making it an attractive entry point for long-term investors. Cargojet’s price-to-earnings (P/E) ratio currently sits at 15.5, significantly below historical averages and industry peers, suggesting the market may be undervaluing the stock.
Yet, looking ahead, Cargojet stock is well-positioned to continue its upward trajectory. The company has been expanding its international reach while maintaining its dominance in the Canadian overnight cargo market. Partnerships with major e-commerce players, including Amazon, provide a steady stream of revenue — all while opening doors to further growth opportunities. The company’s ability to secure long-term contracts ensures stability, while its focus on efficiency and customer satisfaction continues to drive operational improvements.
Cargojet stock’s financial health further strengthens its investment case. With net cash from operating activities reaching $328.6 million in 2024, the company has ample liquidity to invest in growth initiatives while maintaining financial flexibility. While Cargojet stock does carry some debt of approximately $755 million as of the most recent quarter, its healthy cash flow and consistent profitability make this manageable. The current dividend yield of 1.35% also provides an additional incentive for income-focused investors.
Bottom line
Of course, no investment is without risk. The air cargo industry can be sensitive to economic conditions, and fluctuating fuel prices can impact margins. However, Cargojet stock’s long-term contracts, operational efficiency, and strong market position help mitigate these risks. The company’s ability to navigate past challenges while continuing to grow revenues and profits demonstrates resilience, making it an appealing choice for investors seeking long-term growth.
In the end, Cargojet stock stands out as a high-quality company currently trading at a discount. With strong earnings, solid financial health, and a positive future outlook, the current dip in share price offers an attractive buying opportunity. For investors willing to hold for the long term, Cargojet stock could deliver not just steady returns but also significant capital appreciation as the market recognizes the company’s true value.
