Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares in the medical air transport company Air Methods Corp (NASDAQ:AIRM) soared higher today after the company reported fourth quarter sales and earnings that out-paced Wall Street's expectations.
So what: Analysts were expecting Air Methods to report sales of $247.47 million and earnings per share of $0.47. Instead, the company reported $249.15 million in fourth quarter sales and $0.59 in EPS that came in 14.9% higher than those estimates.
Air Methods also announced full year 2014 results that included revenue of $1.005 billion, up 14% from 2013, and EPS of $2.56, up from $1.55 in 2013.
Air Methods' December 2013 acquisition of helicopter tour operator Blue Hawaiian Helicopters is a major reason for the company's increase in revenue. Blue Hawaiian's operations added $13.8 million to Air Methods' fourth quarter sales and $56.3 million to its 2014 revenue.
Increases in both patient transport volume and revenue per patient transported also contributed to the company's sales growth. In the fourth quarter, net patient transport revenue increased 15% from a year ago as total patients transported from community-based locations grew 9% and net revenue per patient improved by 6%.
Now what: Patient transport volumes can be affected by seasonal conditions that can cause weather cancellations, and despite wide swings in share prices, Air Methods has ultimately made little headway since 2013. Whether or not the company is better prepared to deliver sustainable returns for investors from here isn't certain, but the company is definitely intriguing. Investors are paying just 16x next year's earnings to own the company, and it's trading at a P/E to growth, or PEG, ratio of just 0.85. That could suggest that there's some value here, especially since the average analysts' outlook is for EPS to grow by 15% in 2016 to $3.37. For that reason, this may be a stock that small cap investors might want to consider.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool recommends Air Methods. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.