LATAM Airlines Group (NYSE: LTM) and American Airlines Group (NASDAQ:AAL) are both transportation companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, profitability, dividends, institutional ownership, risk and earnings.
Volatility & Risk
LATAM Airlines Group has a beta of 1.75, suggesting that its share price is 75% more volatile than the S&P 500. Comparatively, American Airlines Group has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500.
This table compares LATAM Airlines Group and American Airlines Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|LATAM Airlines Group||1.66%||3.75%||0.84%|
|American Airlines Group||4.55%||63.78%||4.57%|
Institutional and Insider Ownership
3.1% of LATAM Airlines Group shares are held by institutional investors. Comparatively, 80.5% of American Airlines Group shares are held by institutional investors. 7.9% of LATAM Airlines Group shares are held by company insiders. Comparatively, 0.6% of American Airlines Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares LATAM Airlines Group and American Airlines Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|LATAM Airlines Group||$9.61 billion||0.99||$155.30 million||$0.26||60.12|
|American Airlines Group||$42.21 billion||0.56||$1.92 billion||$4.88||10.31|
American Airlines Group has higher revenue and earnings than LATAM Airlines Group. American Airlines Group is trading at a lower price-to-earnings ratio than LATAM Airlines Group, indicating that it is currently the more affordable of the two stocks.
LATAM Airlines Group pays an annual dividend of $0.02 per share and has a dividend yield of 0.1%. American Airlines Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.8%. LATAM Airlines Group pays out 7.7% of its earnings in the form of a dividend. American Airlines Group pays out 8.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
This is a summary of current recommendations and price targets for LATAM Airlines Group and American Airlines Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|LATAM Airlines Group||3||3||0||0||1.50|
|American Airlines Group||1||4||10||0||2.60|
LATAM Airlines Group presently has a consensus target price of $15.00, suggesting a potential downside of 4.03%. American Airlines Group has a consensus target price of $62.40, suggesting a potential upside of 24.08%. Given American Airlines Group’s stronger consensus rating and higher probable upside, analysts clearly believe American Airlines Group is more favorable than LATAM Airlines Group.
American Airlines Group beats LATAM Airlines Group on 11 of the 16 factors compared between the two stocks.
LATAM Airlines Group Company Profile
LATAM Airlines Group SA is a Chile-based company, which is engaged in passenger and cargo air transportation, both in the domestic markets of Chile, Peru, Argentina, Colombia, Ecuador and Brazil and in a developed series of regional and international routes in America, Europe and Oceania. These businesses are performed directly or through its subsidiaries in different countries. It operates through two segments: the Air transportation business and the Coalition and loyalty program Multiplus. It Air transportation segment corresponds to the route network for air transport. Its segment of Coalition and loyalty program called Multiplus is a frequent flyer programs, which operate as a unilateral system of loyalty that offers a flexible coalition system. The Company operates a fleet of over 329 aircrafts. Its passenger aircrafts include Airbus A319-100, Airbus A350-900, Boeing 767-300ER, Boeing 787-8, Boeing 787-9 and Boeing 777-300ER.
American Airlines Group Company Profile
American Airlines Group Inc. is a holding company. The Company’s primary business activity is the operation of a network air carrier, providing scheduled air transportation for passengers and cargo. The Company operates through American segment, which provides air transportation for passengers and cargo. The Company’s cargo division provides a range of freight and mail services with facilities and interline connections available across the globe. Together with its regional airline subsidiaries and third-party regional carriers operating as American Eagle, its airline operated an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries, principally from its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, District of Columbia, as of December 31, 2016. In the fiscal year ended December 31, 2016, approximately 199 million passengers boarded its mainline and regional flights.
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