Investors were less than pleased with the recent earnings results of Canadian air carrier Cargojet (TSE:CJT). Shares gained fractionally, even though the news was mostly good for the company. The highlight of the report was a rise in overall profit. Earnings per share came in at $1.84 per diluted share, which was a nice rise from the $1.67 seen in the first quarter of 2023. Overall, profit for the first quarter came in at $32.5 million, which was up from $30.5 million back in 2023’s first quarter.
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However, there was a downside, if only a modest one: revenue was slightly down, as Cargojet posted $231.2 million against the first quarter of 2023’s $231.9 million. Cargojet’s co-CEO, Pauline Dhillon, attributed the results to a combination of factors but mostly pointed to cost-saving measures like “…streamlined maintenance processes, optimized schedules, and better shift management.”
Less Is Less
Despite those who like to claim that “less is more,” objectively, it’s still less. And indeed, Cargojet brought in less. Yes, it used what it brought in to better effect, as seen by the rising earnings figures in the face of declining revenue. But cost-cutting measures can really only improve profitability for so long. And that might be a lot of why Cargojet was briefly down in today’s trading, if only fractionally.
Perhaps worse yet, according to co-CEO Jamie Porteous, Cargojet has been working on these improvements since 2023. It’s managed to staunch its own bleeding out…but what is it doing to replace the lost blood? Back in February, we saw Cargojet cut off an order for eight Boeing (NYSE:BA) 777 freighters. That saved a lot of costs, but that’s eight freighters worth of cargo it can’t haul and eight freighters of unrealized revenue.
Is Cargojet Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Cargojet stock based on six Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 10.16% rally in its share price over the past year, the average Cargojet price target of C$150.13 per share implies 29.21% upside potential.
