Critical Comparison: Alaska Air Group (ALK) and China Southern Airlines Company Limited (ZNH)
Alaska Air Group (NYSE: ALK) and China Southern Airlines Company Limited (NYSE:ZNH) are both mid-cap transportation companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, profitability, institutional ownership, dividends, earnings, analyst recommendations and valuation.
Institutional and Insider Ownership
94.4% of Alaska Air Group shares are owned by institutional investors. Comparatively, 0.5% of China Southern Airlines Company Limited shares are owned by institutional investors. 0.6% of Alaska Air Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Alaska Air Group pays an annual dividend of $1.20 per share and has a dividend yield of 1.4%. China Southern Airlines Company Limited pays an annual dividend of $0.64 per share and has a dividend yield of 1.7%. Alaska Air Group pays out 19.5% of its earnings in the form of a dividend. Alaska Air Group has increased its dividend for 3 consecutive years and China Southern Airlines Company Limited has increased its dividend for 2 consecutive years.
Valuation & Earnings
This table compares Alaska Air Group and China Southern Airlines Company Limited’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Alaska Air Group||$6.94 billion||1.49||$1.84 billion||$6.16||13.61|
|China Southern Airlines Company Limited||$17.54 billion||0.42||$2.92 billion||N/A||N/A|
China Southern Airlines Company Limited has higher revenue and earnings than Alaska Air Group.
This is a summary of current ratings and recommmendations for Alaska Air Group and China Southern Airlines Company Limited, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alaska Air Group||0||2||8||0||2.80|
|China Southern Airlines Company Limited||1||0||1||0||2.00|
Alaska Air Group currently has a consensus price target of $103.78, suggesting a potential upside of 23.83%. Given Alaska Air Group’s stronger consensus rating and higher possible upside, research analysts clearly believe Alaska Air Group is more favorable than China Southern Airlines Company Limited.
This table compares Alaska Air Group and China Southern Airlines Company Limited’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alaska Air Group||11.02%||30.04%||9.14%|
|China Southern Airlines Company Limited||N/A||N/A||N/A|
Volatility & Risk
Alaska Air Group has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500. Comparatively, China Southern Airlines Company Limited has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.
Alaska Air Group beats China Southern Airlines Company Limited on 11 of the 16 factors compared between the two stocks.
Alaska Air Group Company Profile
Alaska Air Group, Inc. is the holding company of Alaska Airlines (Alaska), Virgin America Inc., Horizon Air (Horizon) and other business units. The Company operates through three segments: Mainline, Regional and Horizon. Its Mainline segment includes Alaska’s and Virgin America’s scheduled air transportation for passengers and cargo throughout the United States, and in parts of Canada, Mexico, Costa Rica and Cuba. Its Regional segment includes Horizon’s and other third-party carriers’ scheduled air transportation for passengers across a shorter distance network within the United States under capacity purchased arrangements (CPAs). Its Horizon segment includes the capacity sold to Alaska under CPA. Alaska and Virgin America operate fleets of narrowbody passenger jets. As of December 31, 2016, it maintained two frequent flyer plans: the Alaska Airlines Mileage Plan and the Virgin America Elevate.
China Southern Airlines Company Limited Company Profile
China Southern Airlines Company Limited is principally engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery and other extended transportation services. The Company operates through two business segments, including Airline Transportation segment and Other segment. Airline Transportation segment consist of passenger and cargo and mail operations. Other segment includes hotel and tour operation, ground services, cargo handling and other miscellaneous services. . The Company also provides services of general aviation and aircraft maintenance. The Company acts as an agency of domestic and foreign airlines, and other aviation and related business, such as personal accident insurance and agency business.
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