Comparing American Airlines Group (NASDAQ:AAL) and Air Canada (NASDAQ:ACDVF)

Air Canada (OTCMKTS:ACDVF) and American Airlines Group (NASDAQ:AAL) are both transportation companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, risk, profitability, institutional ownership, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Air Canada and American Airlines Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Air Canada 0 1 4 0 2.80
American Airlines Group 2 5 11 0 2.50

Air Canada presently has a consensus target price of $32.00, suggesting a potential downside of 3.11%. American Airlines Group has a consensus target price of $41.40, suggesting a potential upside of 60.53%. Given American Airlines Group’s higher probable upside, analysts clearly believe American Airlines Group is more favorable than Air Canada.

Institutional and Insider Ownership

0.1% of Air Canada shares are held by institutional investors. Comparatively, 78.8% of American Airlines Group shares are held by institutional investors. 0.9% of American Airlines Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Air Canada and American Airlines Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Air Canada 5.85% 21.91% 3.94%
American Airlines Group 3.35% -588.10% 3.48%

Dividends

American Airlines Group pays an annual dividend of $0.40 per share and has a dividend yield of 1.6%. Air Canada does not pay a dividend. American Airlines Group pays out 8.8% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Air Canada and American Airlines Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Air Canada $13.94 billion 0.63 $128.84 million N/A N/A
American Airlines Group $44.54 billion 0.26 $1.41 billion $4.55 5.67

American Airlines Group has higher revenue and earnings than Air Canada.

Air Canada Company Profile

Air Canada provides domestic, U.S. transborder, and international airline services. It offers scheduled passenger services under the Air Canada Vacations and Air Canada Rouge brand name in the Canadian market, the Canada-U.S. transborder market, and in the international market to and from Canada, as well as through capacity purchase agreements on other regional carriers. As of December 31, 2018, the company operated a fleet of 184 aircraft under the Air Canada mainline brand name comprising 91 Boeing and Airbus narrow-body aircraft, 74 Boeing and Airbus wide-body aircraft, and 19 Embraer 190 regional jets; and 53 aircraft under the Air Canada Rouge brand name consisting of 22 Airbus A319 aircraft, 6 Airbus A321 aircraft, and 25 Boeing 767-300 aircraft. It also provides air cargo services in domestic and U.S. transborder routes, as well as on international routes between Canada and markets in Europe, Asia, South America, and Australia. In addition, the company operates, develops, markets, and distributes vacation travel packages in the Caribbean, Mexico, the United States, Europe, Central and South America, South Pacific, Australia, and Asia; and offers cruise packages in North America, Europe, and the Caribbean. Air Canada was founded in 1937 and is based in Saint-Laurent, Canada.

American Airlines Group Company Profile

American Airlines Group Inc., through its subsidiaries, operates as a network air carrier. It provides scheduled air transportation services for passengers and cargo. As of December 31, 2018, the company operated a mainline fleet of 956 aircraft. It serves 350 destinations in approximately 50 countries, principally from its hubs in Charlotte, Chicago, Dallas/Fort Worth, London Heathrow, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C. The company was formerly known as AMR Corporation and changed its name to American Airlines Group Inc. in December 2013. American Airlines Group Inc. was founded in 1934 and is headquartered in Fort Worth, Texas.

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