United Continental (NYSE: UAL) and Avianca (NYSE:AVH) are both industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.
Volatility & Risk
United Continental has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500. Comparatively, Avianca has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500.
Institutional & Insider Ownership
95.7% of United Continental shares are held by institutional investors. Comparatively, 4.2% of Avianca shares are held by institutional investors. 0.3% of United Continental shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This table compares United Continental and Avianca’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
Avianca pays an annual dividend of $0.09 per share and has a dividend yield of 1.1%. United Continental does not pay a dividend. Avianca pays out 11.7% of its earnings in the form of a dividend.
This is a summary of current recommendations and price targets for United Continental and Avianca, as reported by MarketBeat.
||Strong Buy Ratings
United Continental presently has a consensus target price of $81.13, suggesting a potential upside of 5.93%. Avianca has a consensus target price of $11.00, suggesting a potential upside of 38.54%. Given Avianca’s stronger consensus rating and higher possible upside, analysts clearly believe Avianca is more favorable than United Continental.
Valuation & Earnings
This table compares United Continental and Avianca’s top-line revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
United Continental has higher revenue and earnings than Avianca. Avianca is trading at a lower price-to-earnings ratio than United Continental, indicating that it is currently the more affordable of the two stocks.
United Continental beats Avianca on 13 of the 16 factors compared between the two stocks.
United Continental Company Profile
United Continental Holdings, Inc. (UAL) is a holding company and its principal subsidiary is United Air Lines, Inc. (United). The Company transports people and cargo through its mainline operations. It has global air rights in North America, Asia-Pacific, Europe, Middle East, Africa and Latin America. The Company, through United and its regional carriers, operates flights from its hubs at Newark Liberty International Airport (Newark Liberty), Chicago O’Hare International Airport (Chicago O’Hare), Denver International Airport (Denver), George Bush Intercontinental Airport (Houston Bush), Los Angeles International Airport (LAX), A.B. Won Pat International Airport (Guam), San Francisco International Airport (SFO) and Washington Dulles International Airport (Washington Dulles). It has contractual relationships with regional carriers to provide regional jet and turboprop service branded as United Express. These regional operations are an extension of the Company’s mainline network.
Avianca Company Profile
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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