Southwest Airlines (NYSE: LUV) and Azul (NYSE:AZUL) are both large-cap transportation companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, risk, dividends, valuation and profitability.
Southwest Airlines pays an annual dividend of $0.50 per share and has a dividend yield of 0.9%. Azul does not pay a dividend. Southwest Airlines pays out 14.3% of its earnings in the form of a dividend. Southwest Airlines has increased its dividend for 6 consecutive years.
This is a summary of recent ratings and target prices for Southwest Airlines and Azul, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Southwest Airlines presently has a consensus price target of $71.24, indicating a potential upside of 24.36%. Azul has a consensus price target of $31.70, indicating a potential downside of 8.79%. Given Southwest Airlines’ higher probable upside, analysts clearly believe Southwest Airlines is more favorable than Azul.
Valuation and Earnings
This table compares Southwest Airlines and Azul’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Southwest Airlines||$21.17 billion||1.59||$3.49 billion||$3.50||16.37|
|Azul||$2.44 billion||4.58||$165.68 million||$1.52||22.86|
Southwest Airlines has higher revenue and earnings than Azul. Southwest Airlines is trading at a lower price-to-earnings ratio than Azul, indicating that it is currently the more affordable of the two stocks.
This table compares Southwest Airlines and Azul’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
80.1% of Southwest Airlines shares are held by institutional investors. Comparatively, 4.3% of Azul shares are held by institutional investors. 0.2% of Southwest Airlines shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Southwest Airlines beats Azul on 11 of the 16 factors compared between the two stocks.
Southwest Airlines Company Profile
Southwest Airlines Co. operates a passenger airline that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2017, the company operated a total of 706 Boeing 737 aircraft; and served 100 destinations in 40 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as 10 near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, Turks, and Chaos. It also sells frequent flyer points and related services to business partners participating in the Rapid Rewards frequent flyer program, such as car rental agencies, hotels, restaurants, and retailers. In addition, the company offers a suite of digital platforms to support customers needs across the travel journey, including Southwest.com, mobile.southwest.com, an iOS app, an android app, an email subscription service, and push notifications; and Swabiz.com, a Website for business customers that offer businesses shared stored company credit cards, company activity reporting, and centralized traveler management services. Southwest Airlines Co. was founded in 1967 and is based in Dallas, Texas.
Azul Company Profile
Azul SA is a Brazil-based company engaged in the provision of passenger transportation services. The Company primarily acts as an airline operator under the Azul brand name. The Company provides scheduled flights between numerous cities in Brazil, including Sao Paulo, Brasilia, Rio de Janeiro, Belo Horizonte, Porto Alegre, Curitiba, Manaus, Cuiaba, Fortaleza and Salvador, among others. In addition, its air network comprises international routes to the Unites States, Europe and other Latin American countries. The Company also offers Azul Cargo Express, a scheduled cargo transport service with airport-to-airport and door-to-door delivery. It owns a number of subsidiaries, such as Azul Linhas Aereas Brasileiras SA and Tudo Azul SA.
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