Delta Air Lines (NYSE: DAL) and Avianca Holdings (NYSE:AVH) are both transportation companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, valuation and institutional ownership.

Earnings & Valuation

This table compares Delta Air Lines and Avianca Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Delta Air Lines $39.88 billion 0.88 $7.48 billion $5.03 9.64
Avianca Holdings $4.33 billion 0.23 $555.92 million $0.76 10.37

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

Insider & Institutional Ownership

86.3% of Delta Air Lines shares are owned by institutional investors. Comparatively, 2.8% of Avianca Holdings shares are owned by institutional investors. 0.4% of Delta Air Lines shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Delta Air Lines and Avianca Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Delta Air Lines 9.30% 28.33% 7.06%
Avianca Holdings 2.20% 13.27% 1.81%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Delta Air Lines and Avianca Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Delta Air Lines 0 1 15 0 2.94
Avianca Holdings 1 3 0 0 1.75

Delta Air Lines presently has a consensus price target of $61.92, suggesting a potential upside of 27.76%. Avianca Holdings has a consensus price target of $9.00, suggesting a potential upside of 14.21%. Given Delta Air Lines’ stronger consensus rating and higher possible upside, equities analysts plainly believe Delta Air Lines is more favorable than Avianca Holdings.

Volatility & Risk

Delta Air Lines has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500. Comparatively, Avianca Holdings has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500.

Dividends

Delta Air Lines pays an annual dividend of $1.22 per share and has a dividend yield of 2.5%. Avianca Holdings pays an annual dividend of $0.09 per share and has a dividend yield of 1.1%. Delta Air Lines pays out 24.3% of its earnings in the form of a dividend. Avianca Holdings pays out 11.8% 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. Avianca Holdings has raised its dividend for 3 consecutive years.

Summary

Delta Air Lines beats Avianca Holdings on 15 of the 17 factors compared between the two stocks.

About Delta Air Lines

Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo throughout the United States and across the world. The Company’s segments include Airline and Refinery. The Company’s route network is centered around a system of hub, international gateway and airports that the Company operates in Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los Angeles, Minneapolis-St. Paul, New York-LaGuardia, New York- John F Kennedy International Airport, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Each of these operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub or gateway to domestic and international cities and to other hubs or gateways. The Company’s route network includes its international joint ventures, its alliances with other foreign airlines, its membership in SkyTeam and agreements with multiple domestic regional carriers that operate as Delta Connection.

About Avianca Holdings

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.

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