Avianca Holdings (NYSE: AVH) and Virgin America (NASDAQ:VA) are both transportation companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, risk, profitability, dividends and earnings.

Risk and Volatility

Avianca Holdings has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, Virgin America has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500.

Institutional and Insider Ownership

2.8% of Avianca Holdings shares are held by institutional investors. Comparatively, 65.6% of Virgin America shares are held by institutional investors. 31.2% of Virgin America shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Avianca Holdings pays an annual dividend of $0.09 per share and has a dividend yield of 1.1%. Virgin America does not pay a dividend. Avianca Holdings pays out 11.8% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current ratings and price targets for Avianca Holdings and Virgin America, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Avianca Holdings 1 3 0 0 1.75
Virgin America 1 2 0 0 1.67

Avianca Holdings presently has a consensus target price of $9.00, indicating a potential upside of 14.21%. Virgin America has a consensus target price of $57.00, indicating a potential upside of 0.04%. Given Avianca Holdings’ stronger consensus rating and higher possible upside, analysts clearly believe Avianca Holdings is more favorable than Virgin America.

Valuation and Earnings

This table compares Avianca Holdings and Virgin America’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Avianca Holdings $4.33 billion 0.23 $555.92 million $0.76 10.37
Virgin America N/A N/A N/A $7.13 7.99

Avianca Holdings has higher revenue and earnings than Virgin America. Virgin America is trading at a lower price-to-earnings ratio than Avianca Holdings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Avianca Holdings and Virgin America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Avianca Holdings 2.20% 13.27% 1.81%
Virgin America 11.64% 22.78% 10.96%

Summary

Virgin America beats Avianca Holdings on 8 of the 12 factors compared between the two stocks.

Avianca Holdings Company Profile

Avianca Holdings SA is a Panama-based company engaged, through its subsidiaries, in the provision of air transportation services for passengers and commercial purposes. The Company was originally established as a strategic alliance between Aerovias del Continente Americano SA (AVIANCA) and Grupo TACA Holdings Limited (GTH), and it mainly operates in North, Central and South America, the Caribbean and Europe. In addition, through codeshare agreements, the Company is active in the operation of other international passenger air routes. As of December 31, 2011, the Company owned such subsidiaries as Latin Airways Corporation and LifeMiles Corporation, among others. On December 28, 2012, the merger of subsidiaries Latin Airways Corporation, as absorbing company, with Synergy Ocean Air Colombia SAS and Soac 2 SAS was formalized. On June 18, 2013, the Company received the first out of 15 ATR 72-600, a turbo-propelled aircraft from ATR, a company engaged in regional aircraft.

Virgin America Company Profile

Virgin America Inc. is an airline that provides scheduled air travel in the United States and Mexico. The Company operates in air transportation service segment. The Company operates from Los Angeles and San Francisco with a presence at Dallas Love Field (DAL) to other destinations in North America. The Company provides service to over 20 airports in the United States and Mexico with a fleet of over 60 narrow-body aircraft. It offers three levels of service: First Class, Main Cabin Select and Main Cabin. The Company’s First Class level of service includes eight-seat cabin with an inflight teammate to provide service. Its Main Cabin Select includes approximately 40 inches of pitch for leg room. The Company’s Main Cabin includes approximately 30 inches of pitch and individual Red inflight entertainment system at every seatback. The Company maintains a guest loyalty program called the Elevate frequent flyer program.

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