Critical Analysis: China Southern Airlines Company Limited (ZNH) & Avianca Holdings (AVH)
China Southern Airlines Company Limited (NYSE: ZNH) and Avianca Holdings (NYSE:AVH) are both transportation companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, valuation, dividends, risk and profitability.
Risk and Volatility
China Southern Airlines Company Limited has a beta of 1.09, indicating that its stock price is 9% more volatile than the S&P 500. Comparatively, Avianca Holdings has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.
This table compares China Southern Airlines Company Limited and Avianca Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|China Southern Airlines Company Limited||N/A||N/A||N/A|
Earnings & Valuation
This table compares China Southern Airlines Company Limited and Avianca Holdings’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|China Southern Airlines Company Limited||$18.53 billion||0.37||$3.04 billion||N/A||N/A|
|Avianca Holdings||$4.33 billion||0.22||$555.92 million||$0.76||10.08|
China Southern Airlines Company Limited has higher revenue and earnings than Avianca Holdings.
Insider and Institutional Ownership
0.5% of China Southern Airlines Company Limited shares are owned by institutional investors. Comparatively, 2.8% of Avianca Holdings shares are owned by institutional investors. 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.
China Southern Airlines Company Limited pays an annual dividend of $0.64 per share and has a dividend yield of 1.8%. Avianca Holdings pays an annual dividend of $0.10 per share and has a dividend yield of 1.3%. Avianca Holdings pays out 13.2% of its earnings in the form of a dividend. China Southern Airlines Company Limited has increased its dividend for 2 consecutive years. China Southern Airlines Company Limited is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current recommendations for China Southern Airlines Company Limited and Avianca Holdings, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|China Southern Airlines Company Limited||1||0||0||0||1.00|
Avianca Holdings has a consensus price target of $9.00, suggesting a potential upside of 17.49%. Given Avianca Holdings’ stronger consensus rating and higher probable upside, analysts clearly believe Avianca Holdings is more favorable than China Southern Airlines Company Limited.
About China Southern Airlines Company Limited
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.
About Avianca Holdings
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.
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