Financial Contrast: SkyWest (NASDAQ:SKYW) versus Air Canada (NASDAQ:ACDVF)

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

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SkyWest $3.22 billion 0.94 $280.37 million $5.30 11.21
Air Canada $13.94 billion 0.64 $128.84 million N/A N/A

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for SkyWest and Air Canada, as provided by MarketBeat.

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

SkyWest currently has a consensus price target of $68.29, indicating a potential upside of 14.92%. Air Canada has a consensus price target of $32.00, indicating a potential downside of 5.02%. Given SkyWest’s stronger consensus rating and higher probable 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 0.8%. 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.

Insider and Institutional Ownership

90.4% of SkyWest shares are owned by institutional investors. Comparatively, 0.1% of Air Canada shares are owned by institutional investors. 3.6% of SkyWest shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
SkyWest 10.53% 15.47% 4.80%
Air Canada 5.85% 21.91% 3.94%

Summary

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

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.

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.

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