Analyzing Avianca Holdings (AVH) and Delta Air Lines (DAL)
Avianca Holdings (NYSE: AVH) and Delta Air Lines (NYSE:DAL) are both transportation companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.
Avianca Holdings pays an annual dividend of $0.09 per share and has a dividend yield of 1.2%. Delta Air Lines pays an annual dividend of $1.22 per share and has a dividend yield of 2.6%. Avianca Holdings pays out 11.8% of its earnings in the form of a dividend. Delta Air Lines pays out 24.3% 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 increased its dividend for 3 consecutive years.
Institutional and Insider Ownership
2.8% of Avianca Holdings shares are held by institutional investors. Comparatively, 86.5% of Delta Air Lines shares are held by institutional investors. 0.4% of Delta Air Lines shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Avianca Holdings and Delta Air Lines’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Avianca Holdings||$4.33 billion||0.22||$555.92 million||$0.76||10.05|
|Delta Air Lines||$39.88 billion||0.87||$7.48 billion||$5.03||9.45|
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.
Volatility and Risk
Avianca Holdings has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, Delta Air Lines has a beta of 1.25, meaning that its stock price is 25% more volatile than the S&P 500.
This table compares Avianca Holdings and Delta Air Lines’ 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%|
This is a summary of current ratings and target prices for Avianca Holdings and Delta Air Lines, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Delta Air Lines||0||1||15||0||2.94|
Avianca Holdings currently has a consensus target price of $9.00, suggesting a potential upside of 17.80%. Delta Air Lines has a consensus target price of $62.50, suggesting a potential upside of 31.52%. Given Delta Air Lines’ stronger consensus rating and higher probable upside, analysts clearly believe Delta Air Lines is more favorable than Avianca Holdings.
Delta Air Lines beats Avianca Holdings on 15 of the 17 factors compared between the two stocks.
Avianca Holdings Company Profile
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.
Delta Air Lines Company Profile
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.
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