Azul (AZUL) versus Avianca (AVH) Critical Analysis

Avianca (NYSE: AVH) and Azul (NYSE:AZUL) are both transportation companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, valuation, profitability, dividends, risk and analyst recommendations.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Avianca and Azul, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Avianca 0 1 2 0 2.67
Azul 0 0 5 0 3.00

Avianca presently has a consensus price target of $11.00, indicating a potential upside of 37.16%. Azul has a consensus price target of $30.95, indicating a potential upside of 25.08%. Given Avianca’s higher possible upside, analysts clearly believe Avianca is more favorable than Azul.

Insider & Institutional Ownership

4.2% of Avianca 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, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Avianca pays an annual dividend of $0.09 per share and has a dividend yield of 1.1%. Azul does not pay a dividend. Avianca pays out 11.7% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Avianca and Azul’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Avianca $4.14 billion 0.16 $44.18 million $0.77 10.42
Azul $1.91 billion 4.16 -$36.21 million N/A N/A

Avianca has higher revenue and earnings than Azul.

Profitability

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

Net Margins Return on Equity Return on Assets
Avianca 2.12% 11.94% 1.61%
Azul N/A N/A N/A

Summary

Avianca beats Azul on 7 of the 12 factors compared between the two stocks.

Avianca Company Profile

Avianca Holdings SA is a 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.

Azul Company Profile

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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