SkyWest (NASDAQ: SKYW) and LATAM Airlines Group (NYSE:LTM) are both transportation companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, profitabiliy, dividends and analyst recommendations.

Insider & Institutional Ownership

90.3% of SkyWest shares are owned by institutional investors. Comparatively, 3.1% of LATAM Airlines Group shares are owned by institutional investors. 3.5% of SkyWest shares are owned by insiders. Comparatively, 7.9% of LATAM Airlines Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

SkyWest pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. LATAM Airlines Group pays an annual dividend of $0.02 per share and has a dividend yield of 0.2%. SkyWest pays out -10.6% 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. SkyWest is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent ratings and price targets for SkyWest and LATAM Airlines Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SkyWest 0 2 2 1 2.80
LATAM Airlines Group 1 5 1 0 2.00

SkyWest currently has a consensus target price of $40.50, indicating a potential upside of 6.86%. LATAM Airlines Group has a consensus target price of $10.20, indicating a potential downside of 15.21%. Given SkyWest’s stronger consensus rating and higher probable upside, research analysts clearly believe SkyWest is more favorable than LATAM Airlines Group.

Profitability

This table compares SkyWest and LATAM Airlines Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SkyWest -4.93% 10.12% 2.92%
LATAM Airlines Group 0.36% 1.01% 0.21%

Risk and Volatility

SkyWest has a beta of 1.72, meaning that its stock price is 72% more volatile than the S&P 500. Comparatively, LATAM Airlines Group has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500.

Valuation & Earnings

This table compares SkyWest and LATAM Airlines Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
SkyWest $3.12 billion 0.63 $594.73 million ($3.01) -12.59
LATAM Airlines Group $9.11 billion 0.80 $1.36 billion $0.05 240.60

LATAM Airlines Group has higher revenue and earnings than SkyWest. SkyWest 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.

Summary

SkyWest beats LATAM Airlines Group on 10 of the 17 factors compared between the two stocks.

SkyWest Company Profile

SkyWest, Inc., through its subsidiaries, SkyWest Airlines, Inc. (SkyWest Airlines) and ExpressJet Airlines, Inc. (ExpressJet), operates regional airline operations in the United States. The Company’s segments include SkyWest Airlines, ExpressJet and SkyWest Leasing. The SkyWest Airlines segment provides regional jet service to airports primarily located in the Midwestern and Western United States, as well as Mexico and Canada. The ExpressJet segment provides regional jet service to airports primarily located in the Eastern and Midwestern United States, as well as Mexico, Canada and the Caribbean. The SkyWest Leasing segment includes its E175 aircraft ownership business. As of December 31, 2016, the Company offered scheduled passenger service with approximately 3,160 daily departures to destinations in the United States, Canada, Mexico and the Caribbean. The Company’s flights are operated as Delta Connection, United Express, American Eagle or Alaska Airlines.

LATAM Airlines Group Company Profile

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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