Critical Analysis: Azul (AZUL) versus Ryanair (NASDAQ:RYAAY)

Ryanair (NASDAQ: RYAAY) and Azul (NYSE:AZUL) are both mid-cap transportation companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.

Profitability

This table compares Ryanair and Azul’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ryanair 21.25% 32.39% 12.71%
Azul N/A N/A N/A

Analyst Ratings

This is a breakdown of recent ratings and price targets for Ryanair and Azul, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ryanair 3 0 5 0 2.25
Azul 0 0 4 0 3.00

Ryanair currently has a consensus target price of $96.00, indicating a potential downside of 20.59%. Azul has a consensus target price of $33.00, indicating a potential upside of 31.74%. Given Azul’s stronger consensus rating and higher probable upside, analysts clearly believe Azul is more favorable than Ryanair.

Insider and Institutional Ownership

40.3% of Ryanair shares are held by institutional investors. Comparatively, 4.6% of Azul shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Ryanair and Azul’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ryanair $7.30 billion 3.95 $1.44 billion $6.79 17.80
Azul $1.91 billion 4.21 -$36.21 million N/A N/A

Ryanair has higher revenue and earnings than Azul.

Summary

Ryanair beats Azul on 7 of the 10 factors compared between the two stocks.

About Ryanair

Ryanair Holdings plc (Ryanair Holdings) is a holding company for Ryanair Limited (Ryanair). Ryanair operates an ultra-low fare, scheduled-passenger airline serving short-haul, point-to-point routes between Ireland, the United Kingdom, Continental Europe, Morocco and Israel. Ryanair provides various ancillary services and engages in other activities connected with its core air passenger service, including non-flight scheduled services, Internet-related services, and the in-flight sale of beverages, food and merchandise. Ryanair markets accommodation services and travel insurance through its Website. It provides hotel and accommodation services. Ryanair provides its own aircraft and passenger handling and ticketing services at Dublin Airport. As of June 30, 2016, Ryanair had a principal fleet of over 350 Boeing 737-800 aircraft and offered over 2,000 scheduled short-haul flights per day serving approximately 200 airports throughout Europe.

About Azul

Azul SA is a Brazil-based company engaged in the provision of passenger transportation services. The Company primarily acts as an airline operator under the Azul brand name. The Company provides scheduled flights between numerous cities in Brazil, including Sao Paulo, Brasilia, Rio de Janeiro, Belo Horizonte, Porto Alegre, Curitiba, Manaus, Cuiaba, Fortaleza and Salvador, among others. In addition, its air network comprises international routes to the Unites States, Europe and other Latin American countries. The Company also offers Azul Cargo Express, a scheduled cargo transport service with airport-to-airport and door-to-door delivery. It owns a number of subsidiaries, such as Azul Linhas Aereas Brasileiras SA and Tudo Azul SA.

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