Air Methods Corporation (AIRM), which provides emergency air transportation, saw revenue grow 5.6% in the first quarter as fuel costs declined sharply. The company has surprised on estimates 2 out of the last 4 quarters. It has a PEG ratio of just 0.69.

Company Description

Air Methods provides emergency air medical transportation for hospitals. The company has a fleet of over 300 helicopters and fixed wing aircraft.

Revenue Climbed 5.6% in the First Quarter

On May 7, Air Methods reported its first-quarter results which surprised on Wall Street estimates by 57.69%. Net income rose 117.4% to $5 million, or 41 cents, from $2.3 million, or 18 cents, in the first quarter of 2008. Analysts expected 26 cents in the quarter.

The increase was attributed to improved net reimbursement per community-based transport and a decline in maintenance and fuel expenses. Fuel expense fell by $1.4 million to 34.3% as fuel costs plunged by 27.9% compared to a year ago.

Revenue grew by 5.6% to $124.7 million from $118.1 million in the year ago period. Net revenue per community-based transport increased 10.3% from last year’s first quarter.

The company is optimistic about 2009 given falling fuel costs and cost-control improvements. Its April flight volume, however, fell to 3,453 from 3,723 in April 2008. Community-based transports for bases open more than one year fell by 2.9% year over year.

Consensus Estimates Jump

Given the improving outlook, covering analysts moved to raise both second quarter and full-year estimates. Second-quarter consensus estimates climbed 6 cents to 64 cents in the last 60 days.

Full-year consensus estimates soared by 16.4% to $2.20 from $1.89 per share in the same time period.

Analysts expect a good year for the company in 2009 with earnings growth of 54.93%.

Value Fundamentals

Air Methods is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 11.88 and a price-to-book of 2.14. The company has a solid 5-year return on equity (ROE) of 14.48%.

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