Financial Review: American Airlines Group (NASDAQ:AAL) versus Air China (OTCMKTS:AIRYY)

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

Analyst Recommendations

This is a breakdown of recent recommendations for American Airlines Group and Air China, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Airlines Group	2	9	8	0	2.32
Air China	1	0	0	0	1.00

American Airlines Group currently has a consensus target price of $15.53, indicating a potential upside of 3.67%. Given American Airlines Group’s stronger consensus rating and higher possible upside, equities research analysts plainly believe American Airlines Group is more favorable than Air China.

Valuation & Earnings

This table compares American Airlines Group and Air China”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Airlines Group	$54.63 billion	0.18	$111.00 million	$0.31	48.32
Air China	$23.86 billion	0.38	-$248.70 million	$0.32	32.50

American Airlines Group has higher revenue and earnings than Air China. Air China 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.

Volatility & Risk

American Airlines Group has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500. Comparatively, Air China has a beta of 0.09, indicating that its stock price is 91% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
American Airlines Group	0.36%	-9.11%	0.57%
Air China	1.12%	5.01%	0.58%

Insider & Institutional Ownership

52.4% of American Airlines Group shares are owned by institutional investors. 0.7% of American Airlines Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

American Airlines Group beats Air China on 9 of the 14 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 Air China

Air China Limited, together with its subsidiaries, provides air passenger, air cargo, and airline-related services in Mainland China, Hong Kong, Macau, Taiwan, China, and internationally. The company operates in Airline Operations and Other Operations segments. It provides aircraft engineering and airport ground handling services. The company is also involved in the import and export trading activities; and provision of cabin, airline catering, air ticketing, human resources, aircraft overhaul and maintenance, and financial services. Air China Limited was founded in 1988 and is headquartered in Beijing, the People's Republic of China.