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LATAM Airlines Group SA Sponsored ADR (LTM)
:LTM
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LATAM Airlines Group SA Sponsored ADR
(NYSE:LTM)
77Outperform
Positive Factors
Balance Sheet
LATAM Airlines has a healthy balance sheet and strong profitability in a rational market.
Growth Potential
The company is expected to experience EBITDA growth as it increases capacity through new planes and more seats per plane.
Negative Factors
Market Recognition
The company is believed to have an undemanding valuation, indicating that the market may not fully recognize its strong margins.
Market Valuation
Shares remain at a deep discount, which is considered unwarranted.
LATAM Airlines Group SA Sponsored ADR (LTM) vs. S&P 500 (SPY)
Market Cap
$9.13B
Dividend Yield0.92%
Average Volume (3M)463.25K
Price to Earnings (P/E)8.9
Beta (1Y)0.85
Revenue Growth10.24%
EPS Growth68.75%
CountryUS
Employees38,664
SectorIndustrials
Sector Strength63
IndustryAirlines, Airports & Air Services
Share Statistics
EPS (TTM)3.24
Shares Outstanding302,218,930
10 Day Avg. Volume399,437
30 Day Avg. Volume463,253
Financial Highlights & Ratios
PEG Ratio0.13
Price to Book (P/B)N/A
Price to Sales (P/S)0.76
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.00Price Target Upside31.53% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
LATAM Airlines Group SA Sponsored ADR Business Overview & Revenue Model
Company DescriptionLATAM Airlines Group S.A., together with its subsidiaries, provides passenger and cargo air transportation services in Chile, Peru, Ecuador, Colombia, Brazil, other Latin American countries, the Caribbean, North America, Europe, and Oceania. It offers other services, such as ground handling, courier, logistics, and maintenance services. As of December 31, 2023, the company provides passenger transport services to 148 destinations in 26 countries and cargo services to 166 destinations in 33 countries; and operated 333 fleet of aircraft. The company was formerly known as LAN Airlines S.A. and changed its name to LATAM Airlines Group S.A. in June 2012. LATAM Airlines Group S.A. was founded in 1929 and is headquartered in Santiago, Chile.
How the Company Makes MoneyLATAM Airlines Group generates revenue primarily through its passenger and cargo transportation services. The company's main revenue stream comes from the sale of airline tickets to passengers traveling on its extensive route network. Additionally, LATAM earns income from its cargo operations, which involve the transportation of goods and freight across its passenger and dedicated cargo flights. Ancillary services, such as baggage fees, seat selection, and in-flight sales, also contribute to its revenue. The company benefits from strategic alliances and codeshare agreements with other international airlines, expanding its market reach and enhancing its service offerings. LATAM's operational efficiency and cost management strategies are vital in maintaining profitability in the highly competitive airline industry.
LATAM Airlines Group SA Sponsored ADR Financial Statement Overview
Summary
LATAM Airlines shows strong revenue and profit growth with improved margins and efficient cash flow management. However, the balance sheet reflects financial risks due to high leverage and low equity ratio, despite strong profitability and cash generation.Income Statement
LATAM Airlines demonstrated strong revenue growth with a 10.24% increase from 2023 to 2024. The gross profit margin improved significantly to 25.45%, reflecting efficient cost management. Net profit margin also improved to 7.61%, suggesting enhanced profitability. EBIT and EBITDA margins increased to 12% and 18.24%, respectively, highlighting better operational performance. Overall, the income statement reflects a positive growth trajectory and improved profitability.82
Very Positive
Balance Sheet
The company's debt-to-equity ratio remains high, reflecting significant leverage with a ratio of 9.89. Return on equity (ROE) has improved to 135.03% due to increased net income, but this is partly due to a low equity base. The equity ratio is low at 4.74%, indicating potential financial risk. The balance sheet shows financial stability challenges despite improved profitability.58
Neutral
Cash Flow
The operating cash flow to net income ratio is strong at 3.18, indicating good cash generation relative to reported earnings. Free cash flow grew by 27.18%, reflecting improved cash management. The free cash flow to net income ratio is 1.82, showcasing efficient cash flow utilization. Overall, cash flow metrics indicate robust cash generation and management.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 12.83B | 11.64B | 9.52B | 4.88B | 4.33B | Gross Profit |
| 3.27B | 2.82B | 2.48B | -79.47M | -444.11M | EBIT |
| 1.54B | 1.08B | 134.87M | -3.43B | -1.67B | EBITDA |
| 2.34B | 1.28B | 2.26B | -3.34B | -4.52B | Net Income Common Stockholders |
| 976.97M | 581.83M | 1.34B | -4.65B | -4.55B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.96B | 1.85B | 1.72B | 1.12B | 1.75B | Total Assets |
| 15.25B | 14.67B | 13.21B | 13.31B | 15.65B | Total Debt |
| 7.15B | 7.04B | 6.78B | 10.40B | 10.85B | Net Debt |
| 5.19B | 5.32B | 5.57B | 9.35B | 9.16B | Total Liabilities |
| 14.54B | 14.23B | 13.18B | 20.38B | 18.09B | Stockholders Equity |
| 723.27M | 450.30M | 42.28M | -7.06B | -2.44B |
| Cash Flow | Free Cash Flow | |||
| 1.69B | 1.40B | -733.86M | -859.86M | -894.39M | Operating Cash Flow |
| 3.11B | 2.26B | 96.80M | -184.10M | -494.70M | Investing Cash Flow |
| -1.17B | -659.50M | -748.96M | -542.65M | 33.61M | Financing Cash Flow |
| -1.56B | -1.15B | 854.96M | 109.64M | 1.12B |
LATAM Airlines Group SA Sponsored ADR Risk Analysis
LATAM Airlines Group SA Sponsored ADR disclosed 48 risk factors in its most recent earnings report. LATAM Airlines Group SA Sponsored ADR reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
LATAM Airlines Group SA Sponsored ADR Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $3.62B | 5.98 | 27.07% | 7.40% | -0.48% | 13.87% | |
77 Outperform | $9.13B | 8.92 | 166.51% | 0.92% | 10.24% | 68.75% | |
72 Outperform | $18.88B | 6.12 | 28.63% | ― | 6.23% | 20.08% | |
67 Neutral | $15.33B | 34.30 | 4.50% | 2.78% | 5.34% | -6.20% | |
62 Neutral | $7.26B | 12.38 | 3.01% | 3.40% | 3.58% | -14.13% | |
56 Neutral | $6.22B | 8.54 | -21.27% | ― | 2.70% | 2.20% | |
47 Neutral | $1.40B | ― | -26.60% | ― | -3.50% | -148.99% |
* Industrials Sector Average
Performance Comparison
LTM
LATAM Airlines Group SA Sponsored ADR
28.89
3.64
14.42%
CPA
Copa Holdings
87.00
-8.99
-9.37%
JBLU
JetBlue Airways
3.94
-3.09
-43.95%
LUV
Southwest Airlines
25.87
-2.11
-7.54%
UAL
United Airlines Holdings
57.67
14.36
33.16%
AAL
American Airlines
9.46
-4.44
-31.94%
LATAM Airlines Group SA Sponsored ADR Earnings Call Summary
Earnings Call Date: Jan 31, 2025 | % Change Since: -4.62% | Next Earnings Date: Apr 28, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong positive sentiment from LATAM Airlines' performance in 2024, highlighted by record passenger growth, strong financial results, operational excellence, and sustainability achievements. The challenges in revenue per ASK and engine supply chain issues were noted, but the overall outlook remains optimistic.Highlights
Record Passenger Growth
In 2024, LATAM Airlines transported a record-breaking 82 million passengers, marking a 15% growth compared to the previous year. This solidifies LATAM's position as the largest airline group in South America.
Strong Financial Performance
LATAM Airlines achieved an adjusted operating margin of 12.7% and an adjusted EBITDAR of $3.1 billion for the year 2024. Net income nearly doubled to $977 million compared to 2023.
Operational Excellence and Customer Satisfaction
LATAM reached its highest-ever Net Promoter Score of 51 points, with 56 points for Premium passengers, and achieved the lowest rate of customer complaints in Chile, Brazil, and Peru.
Sustainability Achievements
LATAM was reincorporated into the Dow Jones Sustainability Index and recognized as the fifth most sustainable airline group worldwide, leading in the Americas and the Western Hemisphere.
Lowlights
Revenue per ASK Decline
There was a 10% year-over-year decrease in consolidated revenues per ASK, impacted by a decline in jet fuel prices and currency depreciation in major markets like Brazil.
Engine Supply Chain Challenges
LATAM faces ongoing challenges with aircraft grounded due to engine supply chain issues from Pratt & Whitney and Rolls-Royce, impacting fleet availability.
Company Guidance
During the Fourth Quarter 2024 LATAM Airlines Group Earnings Conference Call, the management provided several key metrics and guidance for 2025. LATAM achieved a record-breaking 82 million passengers for the year, marking a 15% growth in operations and maintaining a consolidated load factor of nearly 86% for the quarter. The group also reported an adjusted operating margin of 12.7% and adjusted EBITDAR of $3.1 billion, contributing to a full-year net income of $977 million, which nearly doubled the previous year's figure. For 2025, LATAM anticipates capacity growth of 7% to 9%, with revenues projected to reach between $14 billion and $14.5 billion. The company's liquidity stands at 27% of last 12 months' revenues, with adjusted net leverage at 1.7x. The guidance for 2025 includes an adjusted EBITDAR forecast of $3.25 billion to $3.6 billion, supported by a healthy demand environment and disciplined cost management.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.