Financial Review: Hawaiian Holdings (HA) and LATAM Airlines Group (LTM)

Hawaiian Holdings (NASDAQ: HA) and LATAM Airlines Group (NYSE:LTM) are both mid-cap transportation companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitabiliy, analyst recommendations, institutional ownership and valuation.

Insider & Institutional Ownership

90.5% of Hawaiian Holdings shares are held by institutional investors. Comparatively, 3.1% of LATAM Airlines Group shares are held by institutional investors. 2.3% of Hawaiian Holdings shares are held by insiders. Comparatively, 7.9% of LATAM Airlines Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Hawaiian Holdings and LATAM Airlines Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hawaiian Holdings 2 4 6 0 2.33
LATAM Airlines Group 1 6 2 0 2.11

Hawaiian Holdings currently has a consensus price target of $54.73, suggesting a potential upside of 18.07%. LATAM Airlines Group has a consensus price target of $10.36, suggesting a potential downside of 7.50%. Given Hawaiian Holdings’ stronger consensus rating and higher possible upside, equities analysts plainly believe Hawaiian Holdings is more favorable than LATAM Airlines Group.

Valuation & Earnings

This table compares Hawaiian Holdings and LATAM Airlines Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hawaiian Holdings $2.51 billion 0.99 $607.32 million $4.27 10.85
LATAM Airlines Group $9.11 billion 0.75 $1.36 billion $0.05 224.00

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

Profitability

This table compares Hawaiian Holdings and LATAM Airlines Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hawaiian Holdings 9.42% 44.77% 10.91%
LATAM Airlines Group 0.36% 1.01% 0.21%

Dividends

LATAM Airlines Group pays an annual dividend of $0.02 per share and has a dividend yield of 0.2%. Hawaiian Holdings does not pay a dividend. LATAM Airlines Group pays out 40.0% of its earnings in the form of a dividend.

Volatility & Risk

Hawaiian Holdings has a beta of 1.43, meaning that its share price is 43% more volatile than the S&P 500. Comparatively, LATAM Airlines Group has a beta of 1.58, meaning that its share price is 58% more volatile than the S&P 500.

Summary

Hawaiian Holdings beats LATAM Airlines Group on 10 of the 16 factors compared between the two stocks.

Hawaiian Holdings Company Profile

Hawaiian Holdings, Inc. is a holding company. The Company is engaged in the scheduled air transportation of passengers and cargo amongst the Hawaiian Islands (the Neighbor Island routes), between the Hawaiian Islands and certain cities in the United States (the North America routes), and between the Hawaiian Islands and the South Pacific, Australia, New Zealand and Asia (the International routes), collectively referred to as its Scheduled Operations. It offers non-stop service to Hawai’i from United States gateway cities. As of December 31, 2016, it also provided approximately 160 daily flights between the Hawaiian Islands. The Company operates various charter flights. As of December 31, 2016, the Company’s fleet consisted of 20 Boeing 717-200 aircraft for the Neighbor Island routes, eight Boeing 767-300 aircraft, and 23 Airbus A330-200 aircraft for the North America, International, and charter routes.

LATAM Airlines Group Company Profile

LATAM Airlines Group S.A. is a Chile-based company, which is engaged in passenger and cargo air transportation, both in the domestic markets of Chile, Peru, Argentina, Colombia, Ecuador and Brazil and in a developed series of regional and international routes in America, Europe and Oceania. These businesses are performed directly or through its subsidiaries in different countries. It operates through two segments: the air transportation business, and the coalition and loyalty program Multiplus. It Air transport segment corresponds to the route network for air transport. Its segment of loyalty coalition called Multiplus is a frequent flyer programs, which operate as a unilateral system of loyalty that offers a flexible coalition system. As of December 31, 2016, the Company operated a fleet of over 329 aircraft. Its passenger aircraft include Airbus A319-100, Airbus A350-900, Boeing 767-300ER, Boeing 787-8, Boeing 787-9 and Boeing 777-300ER.

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