Critical Survey: Air China (OTCMKTS:AIRYY) & American Airlines Group (NASDAQ:AAL)

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Air China and American Airlines Group, as provided by MarketBeat.

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

American Airlines Group has a consensus price target of $15.53, indicating a potential upside of 14.19%. Given American Airlines Group’s stronger consensus rating and higher possible upside, analysts plainly believe American Airlines Group is more favorable than Air China.

Insider and Institutional Ownership

52.4% of American Airlines Group shares are held by institutional investors. 0.7% of American Airlines Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

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

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Air China	$23.86 billion	0.38	-$248.70 million	$0.32	32.50
American Airlines Group	$54.63 billion	0.16	$111.00 million	$0.31	43.87

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.

Profitability

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

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

Summary

American Airlines Group beats Air China on 9 of the 14 factors compared between the two stocks.

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.

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.