Financial Survey: Air Canada (OTCMKTS:ACDVF) and SkyWest (OTCMKTS:SKYW)

Air Canada (OTCMKTS:ACDVF) and SkyWest (NASDAQ:SKYW) are both mid-cap transportation companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, dividends, earnings, institutional ownership, analyst recommendations and risk.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Air Canada and SkyWest, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Air Canada 0 1 4 0 2.80
SkyWest 0 1 5 1 3.00

Air Canada currently has a consensus price target of $32.00, suggesting a potential upside of 1.49%. SkyWest has a consensus price target of $69.29, suggesting a potential upside of 28.98%. Given SkyWest’s stronger consensus rating and higher possible upside, analysts plainly believe SkyWest is more favorable than Air Canada.

Dividends

SkyWest pays an annual dividend of $0.48 per share and has a dividend yield of 0.9%. Air Canada does not pay a dividend. SkyWest pays out 9.1% of its earnings in the form of a dividend. SkyWest has increased its dividend for 3 consecutive years.

Institutional and Insider Ownership

0.1% of Air Canada shares are owned by institutional investors. Comparatively, 90.5% of SkyWest shares are owned by institutional investors. 3.6% of SkyWest shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Air Canada and SkyWest’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Air Canada $13.94 billion 0.60 $128.84 million N/A N/A
SkyWest $3.22 billion 0.85 $280.37 million $5.30 10.14

SkyWest has lower revenue, but higher earnings than Air Canada.

Profitability

This table compares Air Canada and SkyWest’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%
SkyWest 10.53% 15.47% 4.80%

Summary

SkyWest beats Air Canada on 12 of the 16 factors compared between the two stocks.

About Air Canada

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.

About SkyWest

SkyWest, Inc. is the holding company for two scheduled passenger airline operations and an aircraft leasing company. SkyWest’s airline companies provide commercial air service in cities throughout North America with nearly 3,000 daily flights carrying more than 53 million passengers annually. SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines and Alaska Airlines. ExpressJet Airlines operates through partnerships with United Airlines, Delta Air Lines and American Airlines. Based in St. George, Utah, SkyWest employs nearly 17,000 employees.

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