American Airlines Group (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV) are both large-cap transportation companies, but which is the better business? We will compare the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.
Earnings & Valuation
This table compares American Airlines Group and Southwest Airlines' top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
American Airlines Group | $45.77 billion | 0.31 | $1.69 billion | $4.90 | 4.50 |
Southwest Airlines | $22.43 billion | 1.64 | $2.30 billion | $4.27 | 14.61 |
Southwest Airlines has lower revenue, but higher earnings than American Airlines Group. American Airlines Group is trading at a lower price-to-earnings ratio than Southwest Airlines, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares American Airlines Group and Southwest Airlines' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
American Airlines Group | -25.56% | N/A | -11.06% |
Southwest Airlines | -12.94% | -22.65% | -7.23% |
Analyst Recommendations
This is a summary of recent ratings and recommmendations for American Airlines Group and Southwest Airlines, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
American Airlines Group | 8 | 7 | 1 | 0 | 1.56 |
Southwest Airlines | 0 | 2 | 17 | 0 | 2.89 |
American Airlines Group currently has a consensus target price of $15.5714, suggesting a potential downside of 29.32%. Southwest Airlines has a consensus target price of $58.95, suggesting a potential downside of 5.51%. Given Southwest Airlines' stronger consensus rating and higher probable upside, analysts plainly believe Southwest Airlines is more favorable than American Airlines Group.
Risk & Volatility
American Airlines Group has a beta of 1.82, suggesting that its share price is 82% more volatile than the S&P 500. Comparatively, Southwest Airlines has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500.
Institutional and Insider Ownership
44.4% of American Airlines Group shares are owned by institutional investors. Comparatively, 74.0% of Southwest Airlines shares are owned by institutional investors. 1.0% of American Airlines Group shares are owned by insiders. Comparatively, 0.3% of Southwest Airlines shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Summary
Southwest Airlines beats American Airlines Group on 8 of the 14 factors compared between the two stocks.