Critical Analysis: Frontier Group (NASDAQ:ULCC) vs. Surf Air Mobility (NYSE:SRFM)

Surf Air Mobility (NYSE:SRFM) and Frontier Group (NASDAQ:ULCC) are both small-cap transportation companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings for Surf Air Mobility and Frontier Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Surf Air Mobility	1	1	2	0	2.25
Frontier Group	2	5	2	0	2.00

Surf Air Mobility currently has a consensus target price of $6.50, suggesting a potential upside of 172.54%. Frontier Group has a consensus target price of $6.38, suggesting a potential upside of 21.66%. Given Surf Air Mobility’s stronger consensus rating and higher probable upside, equities analysts clearly believe Surf Air Mobility is more favorable than Frontier Group.

Valuation and Earnings

This table compares Surf Air Mobility and Frontier Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Surf Air Mobility	$119.43 million	1.25	-$74.91 million	($2.48)	-0.96
Frontier Group	$3.78 billion	0.32	$85.00 million	($0.61)	-8.59

Frontier Group has higher revenue and earnings than Surf Air Mobility. Frontier Group is trading at a lower price-to-earnings ratio than Surf Air Mobility, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

17.7% of Surf Air Mobility shares are held by institutional investors. 8.0% of Surf Air Mobility shares are held by company insiders. Comparatively, 48.0% of Frontier Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Surf Air Mobility has a beta of 3.03, suggesting that its share price is 203% more volatile than the S&P 500. Comparatively, Frontier Group has a beta of 2.55, suggesting that its share price is 155% more volatile than the S&P 500.

Profitability

This table compares Surf Air Mobility and Frontier Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Surf Air Mobility	-66.95%	N/A	-58.16%
Frontier Group	-3.65%	-25.73%	-2.10%

Summary

Surf Air Mobility beats Frontier Group on 7 of the 13 factors compared between the two stocks.

About Surf Air Mobility

Surf Air Mobility Inc. operates as an electric aviation and air travel company in the United States. The company offers an air mobility platform with scheduled routes and on demand charter flights operated by third parties. Surf Air Mobility Inc. is headquartered in Hawthorne, California.

About Frontier Group

Frontier Group Holdings, Inc., provides low-fare passenger airline services to leisure travelers in the United States and Latin America. The company sells its products through direct distribution channels, including its website, mobile app, and contact centers. As of December 31, 2023, it had a fleet of 136 Airbus single-aisle aircrafts. Frontier Group Holdings, Inc. was founded in 1994 and is headquartered in Denver, Colorado.