Air Methods Corp - Aggressive Growth

Air Methods Corp (AIRM) is coming off of back-to-back earnings surprises, thanks to solid increases in revenue.

Currently shares are trading with great valuations, solid growth rates and a Zacks #1 Rank (Strong Buy).

Company Description

Air Methods provides emergency medical air transportation services and systems. The company has about 300 aircrafts that operate from bases in 42 states.

Earning Soar Above Expectations

Nov 4's earnings release was much better than analysts were expecting. Revenue rose 11% to $154 million, and YTD revenue is up 5% to $412 million.

Net income jumped 48%, to $18.6 million, or $1.48 per share. Analysts were looking for 98 cents, giving Air Methods back-to-back surprises.

Estimates Pop

After the earnings release earnings estimates saw a nice jump. The Zacks Consensus Estimate for this year is up 44 cents, to $2.89. Next year's estimates are up 32 cents on average, to $3.04.

Given these levels annual growth rates for Air Methods are expected to be 27% and 5%, respectively.

Great Value and Comparisons

Shares of AIRM are trading at a discount as well. Currently, the forward P/E is just 14 times and the PEG is only 0.8. Each mark is better than its industry average.

Air Methods operates with an ROE of 16.4%, 190 bps better than the average of its peers. The company's net profit margin is 6.4%, trumping the industry average of 3.6%.

The Chart

Valuations keep getting better because the stock is trading sideways, while estimates keep rising. I would have expected AIRM to keep climbing on the earnings news, but for now investors still have a chance to get in at a good price.

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
 
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