Analyzing Avianca Holdings (AVH) and LATAM Airlines Group (LTM)
Avianca Holdings (NYSE: AVH) and LATAM Airlines Group (NYSE:LTM) are both transportation companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, dividends, institutional ownership and risk.
This table compares Avianca Holdings and LATAM Airlines Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|LATAM Airlines Group||-0.14%||-0.16%||-0.03%|
This is a summary of recent ratings for Avianca Holdings and LATAM Airlines Group, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|LATAM Airlines Group||1||3||1||0||2.00|
Avianca Holdings presently has a consensus price target of $9.00, suggesting a potential upside of 14.21%. LATAM Airlines Group has a consensus price target of $10.67, suggesting a potential downside of 25.30%. Given Avianca Holdings’ higher possible upside, equities analysts clearly believe Avianca Holdings is more favorable than LATAM Airlines Group.
Volatility and Risk
Avianca Holdings has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500. Comparatively, LATAM Airlines Group has a beta of 1.59, meaning that its stock price is 59% more volatile than the S&P 500.
Valuation & Earnings
This table compares Avianca Holdings and LATAM Airlines Group’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|
|LATAM Airlines Group||$9.29 billion||0.93||$1.41 billion||($0.01)||-1,426.57|
LATAM Airlines Group has higher revenue and earnings than Avianca Holdings. LATAM Airlines Group is trading at a lower price-to-earnings ratio than Avianca Holdings, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
2.8% of Avianca Holdings shares are owned by institutional investors. Comparatively, 3.2% of LATAM Airlines Group shares are owned by institutional investors. 7.9% of LATAM Airlines Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Avianca Holdings pays an annual dividend of $0.09 per share and has a dividend yield of 1.1%. LATAM Airlines Group pays an annual dividend of $0.02 per share and has a dividend yield of 0.1%. Avianca Holdings pays out 11.8% of its earnings in the form of a dividend. LATAM Airlines Group pays out -199.8% 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.
LATAM Airlines Group beats Avianca Holdings on 10 of the 16 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.
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.
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