Southwest Airlines (LUV) versus Copa (CPA) Head to Head Survey

Southwest Airlines (NYSE: LUV) and Copa (NYSE:CPA) are both transportation companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Southwest Airlines and Copa, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southwest Airlines 0 4 14 0 2.78
Copa 0 3 4 0 2.57

Southwest Airlines presently has a consensus target price of $71.24, indicating a potential upside of 28.40%. Copa has a consensus target price of $148.50, indicating a potential upside of 17.99%. Given Southwest Airlines’ stronger consensus rating and higher probable upside, equities analysts clearly believe Southwest Airlines is more favorable than Copa.

Dividends

Southwest Airlines pays an annual dividend of $0.50 per share and has a dividend yield of 0.9%. Copa pays an annual dividend of $3.48 per share and has a dividend yield of 2.8%. Southwest Airlines pays out 14.3% of its earnings in the form of a dividend. Copa pays out 40.2% 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. Southwest Airlines has raised its dividend for 6 consecutive years.

Valuation & Earnings

This table compares Southwest Airlines and Copa’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southwest Airlines $21.17 billion 1.54 $3.49 billion $3.50 15.85
Copa $2.53 billion 2.10 $370.02 million $8.66 14.53

Southwest Airlines has higher revenue and earnings than Copa. Copa is trading at a lower price-to-earnings ratio than Southwest Airlines, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Southwest Airlines has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Copa has a beta of 1.74, indicating that its stock price is 74% more volatile than the S&P 500.

Profitability

This table compares Southwest Airlines and Copa’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Southwest Airlines 16.48% 23.43% 8.68%
Copa 14.64% 18.25% 8.92%

Insider and Institutional Ownership

80.1% of Southwest Airlines shares are owned by institutional investors. Comparatively, 64.9% of Copa shares are owned by institutional investors. 0.2% of Southwest Airlines shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Southwest Airlines beats Copa on 12 of the 17 factors compared between the two stocks.

Southwest Airlines Company Profile

Southwest Airlines Co. operates a passenger airline that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2017, the company operated a total of 706 Boeing 737 aircraft; and served 100 destinations in 40 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as 10 near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, Turks, and Chaos. It also sells frequent flyer points and related services to business partners participating in the Rapid Rewards frequent flyer program, such as car rental agencies, hotels, restaurants, and retailers. In addition, the company offers a suite of digital platforms to support customers needs across the travel journey, including Southwest.com, mobile.southwest.com, an iOS app, an android app, an email subscription service, and push notifications; and Swabiz.com, a Website for business customers that offer businesses shared stored company credit cards, company activity reporting, and centralized traveler management services. Southwest Airlines Co. was founded in 1967 and is based in Dallas, Texas.

Copa Company Profile

Copa Holdings, S.A., through its subsidiaries, provides airline passenger and cargo services in Panama and internationally. The company offers flights to 75 destinations in 31 countries in North, Central, and South America, as well as the Caribbean. As of February, 22, 2018, it operated a fleet of 101 aircraft comprising 81 Boeing 737NG aircraft and 20 Embraer-190s aircraft. The company has strategic alliances with United Continental Holdings, Inc. and United Airlines. Copa Holdings, S.A. was founded in 1947 and is based in Panama City, Panama.

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