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1. Company Snapshot

1.a. Company Description

Cargojet Inc.provides time sensitive overnight air cargo services in Canada.Its air cargo business activities include operation of domestic air cargo network services between fourteen cities in North America; and provision of dedicated aircraft to customers on an aircraft, crew, maintenance, and insurance (ACMI) basis operating between points in Canada, North and South America, and Europe.


The company also operates scheduled international routes for various cargo customers between the United States and Bermuda; and between Canada, the United Kingdom, and Germany.In addition, it offers aircraft to customers on an adhoc charter basis operating between points in Canada, the United States, and other international destinations; and specialty charter services for livestock shipments, military equipment movements, emergency relief supplies, and virtually large shipments across North America, South America, the Caribbean, and Europe.Further, the company is involved in the flight planning and dispatch, crew planning and training, ground handling, and commercial airline cargo management businesses.


As of December 31, 2021, it operated a fleet of 31 aircraft.The company was founded in 2005 and is headquartered in Mississauga, Canada.

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1.b. Last Insights on CJT

The recent stock performance of Cargojet Inc. was impacted by underlying issues with the quality of its earnings, despite announcing strong financial results. The company's revenue increased by 14% year-over-year to CA$1.00b in 2024, driven by strong demand in the air cargo industry. However, the adjusted profit surged, partly due to a significant jump in fourth-quarter adjusted profit, but the underlying issues with earnings quality may have contributed to the sluggish stock performance. Additionally, the company's premium pricing and favorable market conditions may have contributed to the strong revenue growth, but the lack of clarity on these factors may have weighed on investor sentiment.

1.c. Company Highlights

2. Cargojet's Resilient Performance Amidst Global Trade Uncertainty

Cargojet Canada Limited reported a mixed financial performance in the quarter, with revenues and adjusted EBITDA margins showcasing the company's resilience in a challenging global trade environment. Earnings per share (EPS) came in at $0.32, significantly lower than analyst estimates of $0.972. Revenue diversification was a key highlight, with domestic revenue growth offsetting the decline in ACMI revenue due to a shift in operations to more north-south focused routes within the Americas. As Aaron McKay, the new Chief Financial Officer, noted, the diversity of revenue streams and the strength of adjusted EBITDA margins were key factors in the company's financial performance.

Publication Date: Nov -23

📋 Highlights
  • Leadership Transition: Jamie Porteous steps down after 24 years; Pauline Dhillon becomes CEO effective January 1, 2026.
  • Financial Strength: Adjusted EBITDA margins remain strong, with net debt/adjusted EBITDA ratio maintained at 1.5–2.5x.
  • DHL Revenue Outlook: DHL contract revenue expected to ramp up slowly, with significant growth anticipated in late 2026 and 2027.
  • Fleet Strategy: Limited new aircraft additions (1 in 2026); potential to reduce fleet to 42 aircraft based on demand.

Revenue Streams and Margin Analysis

The company's diversified revenue streams, including domestic, ACMI, and charter revenues, helped mitigate the impact of global trade uncertainty. While ACMI revenue declined due to a shift in operations, domestic revenue growth was a positive highlight. The company's adjusted EBITDA margins remained strong, reflecting its ability to maintain discipline and flexibility in fleet management. The expected increase in ACMI and charter revenues in Q4 versus Q3, although not to the same extent as historically, is a positive sign.

Valuation and Growth Prospects

With a P/E Ratio of 8.02 and an EV/EBITDA ratio of 7.49, the market appears to be pricing in moderate growth prospects for Cargojet. Analysts estimate revenue growth at 2.9% for next year, which may not be sufficient to drive significant multiple expansion. However, the company's adaptable business model, ability to adjust to changing market conditions, and focus on new trade routes and opportunities are positive factors that could support long-term growth.

Fleet Management and Capacity Planning

Cargojet's fleet management strategy is focused on maintaining flexibility in response to changing demand. With limited new additions to the fleet planned after Q4, the company is expected to maintain a stable capacity profile. The ability to adjust block hours, variable expenses, and cost infrastructure in response to changing market conditions is a key strength, as demonstrated during the COVID-19 pandemic.

Expansion into New Markets

The company's expansion into Europe, with a scheduled service from Liege, is a positive development that could provide new growth opportunities. Cargojet's focus on identifying trade routes that match its customers' needs and expectations is a key factor in its success. The company's ability to adapt to changing market conditions and customer needs will be crucial in driving long-term growth.

3. NewsRoom

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Cargojet (TSE:CJT) Is Due To Pay A Dividend Of CA$0.35

Nov -29

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Cargojet Declares Quarterly Dividend

Nov -25

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How the Narrative Around Cargojet Is Shifting After Analyst Revisions and Company Updates

Nov -23

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UPS compensates for lost use of grounded MD-11 cargo jets

Nov -19

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Cargojet (TSX:CJT) Valuation in Focus After Earnings Miss, Leadership Shakeup, and European Expansion

Nov -10

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How Recent Analyst Developments Are Shaping the Evolving Cargojet Investment Story

Nov -07

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Cargojet (TSX:CJT) Earnings Growth Outpaces Market, Spotlight on Sustainability of Profit Momentum

Nov -06

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Cargojet Announces Pauline Dhillon as CEO, Effective January 1, 2026

Nov -05

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.16%)

6. Segments

Air Cargo Services

Expected Growth: 7%

Cargojet Inc.'s 7% growth in Air Cargo Services is driven by increasing e-commerce demand, rising air freight rates, and capacity constraints in the industry. Additionally, the company's strategic partnerships, investments in fleet modernization, and expansion into new markets have contributed to its growth momentum.

Other Sources

Expected Growth: 9%

Cargojet's 9% growth in Other Sources is driven by increased demand for e-commerce logistics, expansion of its air cargo services, and strategic partnerships with major retailers. Additionally, investments in digitalization and process automation have improved operational efficiency, leading to higher revenue generation.

7. Detailed Products

Air Cargo Services

Cargojet provides air cargo services to a wide range of customers, including major courier companies, freight forwarders, and logistics providers.

Priority Overnight Service

Cargojet's priority overnight service guarantees next-business-day delivery of time-critical shipments across Canada.

Same-Day Service

Cargojet offers same-day delivery services for urgent shipments within major Canadian cities.

Ground Cargo Services

Cargojet provides ground cargo services for less time-sensitive shipments, offering cost-effective solutions for customers.

Charter Services

Cargojet offers charter services for customers requiring dedicated aircraft for large or heavy shipments.

Specialized Cargo Services

Cargojet provides specialized cargo services for unique or sensitive shipments, such as perishable goods, hazardous materials, or high-value items.

8. Cargojet Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Cargojet's services are highly specialized, and substitutes are limited, reducing the threat of substitutes.

Bargaining Power Of Customers

Cargojet's customers have some bargaining power due to their large volumes, but the company's specialized services and long-term contracts mitigate this power.

Bargaining Power Of Suppliers

Cargojet has a diverse supplier base, and its suppliers have limited bargaining power due to the company's large scale and specialized requirements.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry in the cargo airline industry is moderate, with a few major players competing for market share, but Cargojet's specialized services and strong relationships with customers help to differentiate it.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 47.26%
Debt Cost 8.97%
Equity Weight 52.74%
Equity Cost 8.97%
WACC 8.97%
Leverage 89.61%

11. Quality Control: Cargojet Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Andlauer Healthcare Group

A-Score: 5.8/10

Value: 3.4

Growth: 7.0

Quality: 6.7

Yield: 1.0

Momentum: 8.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Pitney Bowes

A-Score: 5.3/10

Value: 7.3

Growth: 1.0

Quality: 4.9

Yield: 6.0

Momentum: 9.0

Volatility: 3.7

1-Year Total Return ->

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Stock-Card
Cargojet

A-Score: 5.1/10

Value: 7.6

Growth: 7.4

Quality: 4.9

Yield: 3.0

Momentum: 1.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
Cryoport

A-Score: 4.6/10

Value: 8.3

Growth: 3.9

Quality: 6.8

Yield: 0.0

Momentum: 7.5

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
Radiant Logistics

A-Score: 4.0/10

Value: 5.8

Growth: 4.0

Quality: 4.6

Yield: 0.0

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
Forward Air

A-Score: 2.3/10

Value: 6.2

Growth: 2.4

Quality: 1.8

Yield: 0.0

Momentum: 1.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

80.21$

Current Price

80.21$

Potential

-0.00%

Expected Cash-Flows