Republic Airways (OTCMKTS: RJETQ) and American Airlines Group (NASDAQ:AAL) are both services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, earnings and valuation.
Valuation and Earnings
This table compares Republic Airways and American Airlines Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Airlines Group||$40.18 billion||0.60||$2.68 billion||$3.93||12.92|
American Airlines Group has higher revenue and earnings than Republic Airways. Republic Airways is trading at a lower price-to-earnings ratio than American Airlines Group, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings for Republic Airways and American Airlines Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Airlines Group||1||5||8||0||2.50|
American Airlines Group has a consensus target price of $60.43, suggesting a potential upside of 19.02%. Given American Airlines Group’s higher possible upside, analysts clearly believe American Airlines Group is more favorable than Republic Airways.
Volatility & Risk
Republic Airways has a beta of 3.56, indicating that its stock price is 256% more volatile than the S&P 500. Comparatively, American Airlines Group has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.
This table compares Republic Airways and American Airlines Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Airlines Group||4.71%||64.92%||4.62%|
Institutional & Insider Ownership
81.3% of American Airlines Group shares are held by institutional investors. 0.7% of American Airlines Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
American Airlines Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.8%. Republic Airways does not pay a dividend. American Airlines Group pays out 10.2% of its earnings in the form of a dividend.
American Airlines Group beats Republic Airways on 10 of the 12 factors compared between the two stocks.
About Republic Airways
Republic Airways Holdings Inc. is a holding company. The Company offers scheduled passenger services through its operating air carrier subsidiaries, Shuttle America Corporation (Shuttle) and Republic Airline Inc. (Republic). The Company’s subsidiaries offer scheduled passenger service on approximately 1,090 flights daily to approximately 120 cities in over 40 states and Canada under scheduled passenger service through its fixed-fee code-share agreements with United Continental Holdings, Inc. (United), Delta Air Lines, Inc. (Delta), and American Airlines Group, Inc. (American). The Company provides its partners with fixed-fee regional airline services, operating as United Express, Delta Connection, or American Eagle, including service out of their hubs and focus cities. It provides approximately 550 flights per day as American Eagle. It provides approximately 250 flights per day as Delta Connection. It provides approximately 300 flights per day as United Express.
About American Airlines Group
American Airlines Group Inc. is a holding company. The Company’s primary business activity is the operation of a network air carrier, providing scheduled air transportation for passengers and cargo. The Company operates through American segment, which provides air transportation for passengers and cargo. The Company’s cargo division provides a range of freight and mail services with facilities and interline connections available across the globe. Together with its regional airline subsidiaries and third-party regional carriers operating as American Eagle, its airline operated an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries, principally from its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, District of Columbia, as of December 31, 2016. In the fiscal year ended December 31, 2016, approximately 199 million passengers boarded its mainline and regional flights.
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