Head-To-Head Contrast: LATAM Airlines Group (LTM) versus Alaska Air Group (ALK)
Alaska Air Group (NYSE: ALK) and LATAM Airlines Group (NYSE:LTM) are both mid-cap transportation companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, profitabiliy, dividends, analyst recommendations, risk, earnings and institutional ownership.
Institutional & Insider Ownership
92.0% of Alaska Air Group shares are owned by institutional investors. Comparatively, 3.1% of LATAM Airlines Group shares are owned by institutional investors. 0.6% of Alaska Air Group shares are owned by insiders. Comparatively, 7.9% of LATAM Airlines Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This is a breakdown of current ratings for Alaska Air Group and LATAM Airlines Group, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Alaska Air Group||0||2||8||0||2.80|
|LATAM Airlines Group||1||6||2||0||2.11|
Alaska Air Group presently has a consensus price target of $103.00, indicating a potential upside of 16.07%. LATAM Airlines Group has a consensus price target of $10.36, indicating a potential downside of 7.50%. Given Alaska Air Group’s stronger consensus rating and higher probable upside, equities analysts plainly believe Alaska Air Group is more favorable than LATAM Airlines Group.
Alaska Air Group pays an annual dividend of $1.20 per share and has a dividend yield of 1.4%. LATAM Airlines Group pays an annual dividend of $0.02 per share and has a dividend yield of 0.2%. Alaska Air Group pays out 20.4% of its earnings in the form of a dividend. LATAM Airlines Group pays out 40.0% 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. Alaska Air Group has increased its dividend for 3 consecutive years. Alaska Air Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Alaska Air Group and LATAM Airlines Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Alaska Air Group||11.51%||30.01%||9.53%|
|LATAM Airlines Group||0.36%||1.01%||0.21%|
Volatility & Risk
Alaska Air Group has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, LATAM Airlines Group has a beta of 1.58, indicating that its stock price is 58% more volatile than the S&P 500.
Earnings & Valuation
This table compares Alaska Air Group and LATAM Airlines Group’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Alaska Air Group||$6.33 billion||1.73||$1.75 billion||$5.88||15.09|
|LATAM Airlines Group||$9.11 billion||0.75||$1.36 billion||$0.05||224.00|
Alaska Air Group has higher revenue, but lower earnings than LATAM Airlines Group. Alaska Air Group is trading at a lower price-to-earnings ratio than LATAM Airlines Group, indicating that it is currently the more affordable of the two stocks.
Alaska Air Group beats LATAM Airlines Group on 13 of the 17 factors compared between the two stocks.
About Alaska Air Group
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.
About LATAM Airlines Group
LATAM Airlines Group S.A. is a Chile-based company, which is engaged in passenger and cargo air transportation, both in the domestic markets of Chile, Peru, Argentina, Colombia, Ecuador and Brazil and in a developed series of regional and international routes in America, Europe and Oceania. These businesses are performed directly or through its subsidiaries in different countries. It operates through two segments: the air transportation business, and the coalition and loyalty program Multiplus. It Air transport segment corresponds to the route network for air transport. Its segment of loyalty coalition called Multiplus is a frequent flyer programs, which operate as a unilateral system of loyalty that offers a flexible coalition system. As of December 31, 2016, the Company operated a fleet of over 329 aircraft. Its passenger aircraft include Airbus A319-100, Airbus A350-900, Boeing 767-300ER, Boeing 787-8, Boeing 787-9 and Boeing 777-300ER.
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