Southwest Airlines (LUV) and Azul (AZUL) Head to Head Contrast

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

Dividends

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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.

Earnings and Valuation

This table compares Azul and Southwest Airlines’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Azul $2.44 billion 4.22 $165.68 million $1.52 21.09
Southwest Airlines $21.17 billion 1.53 $3.49 billion $3.50 15.75

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.

Institutional and Insider Ownership

4.3% of Azul shares are owned by institutional investors. Comparatively, 80.1% of Southwest Airlines shares are owned by institutional investors. 0.2% of Southwest Airlines 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.

Profitability

This table compares Azul and Southwest Airlines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Azul 6.76% 24.15% 5.73%
Southwest Airlines 16.48% 23.43% 8.68%

Analyst Recommendations

This is a summary of current recommendations for Azul and Southwest Airlines, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Azul 0 0 6 0 3.00
Southwest Airlines 0 4 15 0 2.79

Azul currently has a consensus price target of $32.96, suggesting a potential upside of 2.83%. Southwest Airlines has a consensus price target of $71.00, suggesting a potential upside of 28.79%. Given Southwest Airlines’ higher probable upside, analysts plainly believe Southwest Airlines is more favorable than Azul.

Summary

Southwest Airlines beats Azul on 11 of the 16 factors compared between the two stocks.

Azul Company Profile

Azul S.A. operates as an airline company in Brazil. It provides passenger and cargo air transportation services. As of September 30, 2017, the company operated 755 daily flights to 104 destinations through a network of 197 non-stop routes with a fleet of 118 aircraft. Azul S.A. was incorporated in 2008 and is headquartered in Barueri, Brazil.

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.

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