Reviewing United Continental (UAL) and Air France-KLM (AFLYY)

United Continental (NYSE: UAL) and Air France-KLM (OTCMKTS:AFLYY) are both transportation companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Institutional & Insider Ownership

96.2% of United Continental shares are held by institutional investors. Comparatively, 4.7% of Air France-KLM 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, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings for United Continental and Air France-KLM, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Continental 0 9 9 0 2.50
Air France-KLM 1 4 0 0 1.80

United Continental currently has a consensus price target of $86.61, suggesting a potential upside of 23.45%. Given United Continental’s stronger consensus rating and higher probable upside, equities analysts clearly believe United Continental is more favorable than Air France-KLM.

Profitability

This table compares United Continental and Air France-KLM’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Continental 5.69% 23.63% 4.83%
Air France-KLM -1.42% 32.01% 3.14%

Valuation and Earnings

This table compares United Continental and Air France-KLM’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
United Continental $37.74 billion 0.52 $2.13 billion $6.76 10.38
Air France-KLM $30.37 billion 0.11 -$309.70 million $2.32 3.49

United Continental has higher revenue and earnings than Air France-KLM. Air France-KLM is trading at a lower price-to-earnings ratio than United Continental, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

United Continental has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Air France-KLM has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Summary

United Continental beats Air France-KLM on 13 of the 14 factors compared between the two stocks.

United Continental Company Profile

United Continental Holdings, Inc., together with its subsidiaries, provides air transportation services in North America, the Asia-Pacific, Europe, the Middle East, Africa, and Latin America. It transports people and cargo through its mainline and regional operations. As of December 31, 2017, the company operated a fleet of 1,262 aircraft. It also sells fuel; and offers catering, ground handling, and maintenance services for third parties. The company was formerly known as UAL Corporation and changed its name to United Continental Holdings, Inc. in October 2010. United Continental Holdings, Inc. was founded in 1934 and is based in Chicago, Illinois.

Air France-KLM Company Profile

Air France-KLM SA, together with its subsidiaries, provides passenger transportation services on scheduled flights. The company operates through Network, Maintenance, Transavia, and Other segments. It also offers cargo transportation and aeronautics maintenance services; and other air-transport-related services. The company operates in France, Benelux, Europe, Africa, the Middle East, Gulf, India, the Asia-Pacific, North America, Caribbean, West Indies, French Guyana, Indian Ocean, and South America. As of December 31, 2017, it operated fleet of 545 aircraft. Air France-KLM SA was founded in 1919 and is headquartered in Paris, France.

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