Avianca Holdings (NYSE: AVH) and Virgin America (NASDAQ:VA) are both transportation companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, dividends, risk, earnings and valuation.
Avianca Holdings pays an annual dividend of $0.09 per share and has a dividend yield of 1.1%. Virgin America does not pay a dividend. Avianca Holdings pays out 11.8% of its earnings in the form of a dividend.
Insider and Institutional Ownership
2.8% of Avianca Holdings shares are held by institutional investors. Comparatively, 65.6% of Virgin America shares are held by institutional investors. 31.2% of Virgin America shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Volatility and Risk
Avianca Holdings has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500. Comparatively, Virgin America has a beta of 1.56, meaning that its stock price is 56% more volatile than the S&P 500.
This table compares Avianca Holdings and Virgin America’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings and Valuation
This table compares Avianca Holdings and Virgin America’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Avianca Holdings||$4.33 billion||0.24||$555.92 million||$0.76||10.79|
Avianca Holdings has higher revenue and earnings than Virgin America. Virgin America is trading at a lower price-to-earnings ratio than Avianca Holdings, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations and price targets for Avianca Holdings and Virgin America, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Avianca Holdings presently has a consensus price target of $9.00, suggesting a potential upside of 9.76%. Virgin America has a consensus price target of $57.00, suggesting a potential upside of 0.04%. Given Avianca Holdings’ higher possible upside, research analysts plainly believe Avianca Holdings is more favorable than Virgin America.
Virgin America beats Avianca Holdings on 8 of the 11 factors compared between the two stocks.
About Avianca Holdings
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.
About Virgin America
Virgin America Inc. is an airline that provides scheduled air travel in the United States and Mexico. The Company operates in air transportation service segment. The Company operates from Los Angeles and San Francisco with a presence at Dallas Love Field (DAL) to other destinations in North America. The Company provides service to over 20 airports in the United States and Mexico with a fleet of over 60 narrow-body aircraft. It offers three levels of service: First Class, Main Cabin Select and Main Cabin. The Company’s First Class level of service includes eight-seat cabin with an inflight teammate to provide service. Its Main Cabin Select includes approximately 40 inches of pitch for leg room. The Company’s Main Cabin includes approximately 30 inches of pitch and individual Red inflight entertainment system at every seatback. The Company maintains a guest loyalty program called the Elevate frequent flyer program.
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