Head-To-Head Analysis: Southwest Airlines (NYSE:LUV) and Air China (OTCMKTS:AIRYY)

Southwest Airlines (NYSE:LUV) and Air China (OTCMKTS:AIRYY) are both large-cap transportation companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, earnings, risk, dividends, institutional ownership, analyst recommendations and profitability.

Insider & Institutional Ownership

80.8% of Southwest Airlines shares are owned by institutional investors. 0.8% of Southwest Airlines shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Southwest Airlines and Air China’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southwest Airlines	1.38%	6.39%	1.83%
Air China	0.19%	0.79%	0.09%

Valuation & Earnings

This table compares Southwest Airlines and Air China”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	$27.48 billion	0.78	$465.00 million	$0.65	63.43
Air China	$23.19 billion	0.65	-$32.35 million	$0.02	904.50

Southwest Airlines has higher revenue and earnings than Air China. Southwest Airlines is trading at a lower price-to-earnings ratio than Air China, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Southwest Airlines has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500. Comparatively, Air China has a beta of -0.09, suggesting that its share price is 109% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Southwest Airlines and Air China, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southwest Airlines	4	12	5	0	2.05
Air China	0	0	0	0	0.00

Southwest Airlines presently has a consensus target price of $38.94, indicating a potential downside of 5.54%. Given Southwest Airlines’ stronger consensus rating and higher probable upside, equities research analysts clearly believe Southwest Airlines is more favorable than Air China.

Summary

Southwest Airlines beats Air China on 13 of the 14 factors compared between the two stocks.

About Southwest Airlines

Southwest Airlines Co. operates as a passenger airline company that provides scheduled air transportation services in the United States and near-international markets. As of December 31, 2023, the company operated a total fleet of 817 Boeing 737 aircraft; and served 121 destinations in 42 states, the District of Columbia, and the Commonwealth of Puerto Rico, as well as ten near-international countries, including Mexico, Jamaica, the Bahamas, Aruba, the Dominican Republic, Costa Rica, Belize, Cuba, the Cayman Islands, and Turks and Caicos. It also provides inflight entertainment and connectivity services on Wi-Fi enabled aircraft; and Rapid Rewards loyalty program that enables program members to earn points for dollars spent on Southwest base fares. In addition, the company offers a suite of digital platforms to support customers’ travel needs, including websites and apps; and SWABIZ, an online booking tool. Further, it provides ancillary services, such as Southwest’s EarlyBird Check-In, upgraded boarding, and transportation of pets and unaccompanied minors. Southwest Airlines Co. was incorporated in 1967 and is headquartered in Dallas, Texas.

About Air China

Air China Limited, together with its subsidiaries, provides air passenger, air cargo, and airline-related services in Mainland China, Hong Kong, Macau, Taiwan, China, and internationally. The company operates in Airline Operations and Other Operations segments. It provides aircraft engineering and airport ground handling services. The company is also involved in the import and export trading activities; and provision of cabin, airline catering, air ticketing, human resources, aircraft overhaul and maintenance, and financial services. Air China Limited was founded in 1988 and is headquartered in Beijing, the People's Republic of China.