Japan Airlines (OTCMKTS:JAPSY) versus American Airlines Group (NASDAQ:AAL) Critical Analysis

American Airlines Group (NASDAQ:AAL) and Japan Airlines (OTCMKTS:JAPSY) are both mid-cap transportation companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Analyst Ratings

This is a summary of current ratings for American Airlines Group and Japan Airlines, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Airlines Group	2	9	6	0	2.24
Japan Airlines	1	0	0	1	2.50

American Airlines Group currently has a consensus price target of $15.47, indicating a potential upside of 42.44%. Given American Airlines Group’s higher probable upside, research analysts plainly believe American Airlines Group is more favorable than Japan Airlines.

Earnings and Valuation

This table compares American Airlines Group and Japan Airlines”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Airlines Group	$54.63 billion	0.13	$111.00 million	$0.17	63.88
Japan Airlines	$12.11 billion	0.58	$706.45 million	$0.98	8.24

Japan Airlines has lower revenue, but higher earnings than American Airlines Group. Japan Airlines is trading at a lower price-to-earnings ratio than American Airlines Group, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

American Airlines Group has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, Japan Airlines has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Profitability

This table compares American Airlines Group and Japan Airlines’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Airlines Group	0.20%	-5.90%	0.38%
Japan Airlines	6.57%	10.93%	4.35%

Institutional & Insider Ownership

52.4% of American Airlines Group shares are owned by institutional investors. 0.6% of American Airlines Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Japan Airlines beats American Airlines Group on 8 of the 15 factors compared between the two stocks.

About American Airlines Group

American Airlines Group Inc., through its subsidiaries, operates as a network air carrier. The company provides scheduled air transportation services for passengers and cargo through its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C., as well as through partner gateways in London, Doha, Madrid, Seattle/Tacoma, Sydney, and Tokyo. It operates a mainline fleet of 965 aircraft. The company was formerly known as AMR Corporation and changed its name to American Airlines Group Inc. in December 2013. American Airlines Group Inc. was founded in 1926 and is headquartered in Fort Worth, Texas.

About Japan Airlines

Japan Airlines Co., Ltd., together with its subsidiaries, provides scheduled and non-scheduled air transport services in Japan, Asia, Oceania, North America, and Europe. The company operates through Air Transportation and Other segments. It offers passenger, ground handling, cargo and mail handling, and maintenance services. The company is also involved in the aerial work and other related business; airport peripheral business; and sale of travel package tours. As of March 31, 2023, it operated a fleet of 224 aircraft. The company was formerly known as Japan Airlines International Co., Ltd. and changed its name to Japan Airlines Co., Ltd. in April 2011. The company was founded in 1951 and is headquartered in Tokyo, Japan.