Chorus increases Earnings but Price doesn't Follow
Chorus Aviation is a stock that this blog has followed for a long time.And for a long time it has traded in the $8 to $10 per share area.In fact, it's earninsg have trended upwards for quite a few quarters after it amended the C.P.A. agreement with Air Canada.But the price has fallen off for the last two quarters.It is possible that the stock is being discounted because of the risk associated with it's new aircraft leasing business.There is no doubt that this is not the steady company that had a secure contact with Air Canada Express anymore.
Q2 Results
Chorus still gets the core of it's revenues from the C.P.A. under which it leases aircraft to Air Canada.There is no information on the amount of revenue but CHR tells us that there is a $1.4 million increase from Q2 in 2017.Thus blog predicted a decrease but instead there was a increase.And adjusted EBITDA at $85 million was $19 million or 26% ahead of 2017.And adjusted EBITDA was $162 million for 6 months compared to $120 million in 2017.In addition, there were two new flying missions with CRJ-200s.And made some money from selling Dash8-300 parts with their Avparts subsidiary.While net income of $16 million was down $25 million from Q2 2017 because of a foreign exchange loss. Risk Adjusted Earnings
Chorus has changed from the company that got all of it's revenues from a contract with Air Canada.It has amended it's contract and still gets most of it's revenues from this contract but revenues have fallen each year.Now they appear to be stable.But Chorus has gotten a larger and larger amount of revenues from it's
other activities including maintenance agreements with Bombardier,charter business from newly acquired Voyageur Airways and leasing aircraft to foreign carriers.This has increased adjusted EBITDA but these businesses are all subject to volatility.Until these businesses have more time to prove themselves and hopefully increase revenues over a five year horizon investors will remain skeptical.This in spite of the fact that this blog expects in 2018 adjusted EBITDA to increase by almost 33%.
This blog feels that the price discount from the former $9.50 price is too large although some discount is understandable.But it's beta is only 1.07 meaning that it is only about as volatile as the index itself.This blog feels that the next 2 quarters are important for Chorus to dispel investor's fears.This stock must continue it's good performance with earnings.With this in mind Chorus needs to probably invest more into it's Voyageur Airways business and improve it's North Bay operation to help grow earnings.Still Chorus is on track to hit adjusted EBITDA of $350 million,with it's continued performance and with improved performance from Voyageur perhaps $375 million.This would be equal to about $2.50 to $2.60 per share.At $7.50 this is a very low P/E ratio and should move CHR up to the $9.50 area by Christmas. https://www.brookfield.com/ ; https://www.zacks.com/
Q2 Results
Chorus still gets the core of it's revenues from the C.P.A. under which it leases aircraft to Air Canada.There is no information on the amount of revenue but CHR tells us that there is a $1.4 million increase from Q2 in 2017.Thus blog predicted a decrease but instead there was a increase.And adjusted EBITDA at $85 million was $19 million or 26% ahead of 2017.And adjusted EBITDA was $162 million for 6 months compared to $120 million in 2017.In addition, there were two new flying missions with CRJ-200s.And made some money from selling Dash8-300 parts with their Avparts subsidiary.While net income of $16 million was down $25 million from Q2 2017 because of a foreign exchange loss. Risk Adjusted Earnings
Chorus has changed from the company that got all of it's revenues from a contract with Air Canada.It has amended it's contract and still gets most of it's revenues from this contract but revenues have fallen each year.Now they appear to be stable.But Chorus has gotten a larger and larger amount of revenues from it's
other activities including maintenance agreements with Bombardier,charter business from newly acquired Voyageur Airways and leasing aircraft to foreign carriers.This has increased adjusted EBITDA but these businesses are all subject to volatility.Until these businesses have more time to prove themselves and hopefully increase revenues over a five year horizon investors will remain skeptical.This in spite of the fact that this blog expects in 2018 adjusted EBITDA to increase by almost 33%.
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