Critical Survey: Ryanair (NASDAQ:RYAAY) and Air France-KLM (OTC:AFLYY)

Air France-KLM (OTC:AFLYY) and Ryanair (NASDAQ:RYAAY) are both transportation companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, earnings, analyst recommendations, dividends and profitability.

Profitability

This table compares Air France-KLM and Ryanair’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Air France-KLM	0.39%	19.62%	0.34%
Ryanair	12.14%	21.46%	9.91%

Insider & Institutional Ownership

0.9% of Air France-KLM shares are held by institutional investors. Comparatively, 43.7% of Ryanair shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Air France-KLM and Ryanair, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Air France-KLM	0	1	0	0	2.00
Ryanair	0	2	3	3	3.13

Ryanair has a consensus target price of $147.00, suggesting a potential upside of 192.07%. Given Ryanair’s stronger consensus rating and higher probable upside, analysts plainly believe Ryanair is more favorable than Air France-KLM.

Volatility and Risk

Air France-KLM has a beta of 1.74, indicating that its share price is 74% more volatile than the S&P 500. Comparatively, Ryanair has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500.

Earnings & Valuation

This table compares Air France-KLM and Ryanair”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Air France-KLM	$32.49 billion	0.07	$1.01 billion	$0.21	4.19
Ryanair	$13.82 billion	1.94	$2.07 billion	$3.26	15.44

Ryanair has lower revenue, but higher earnings than Air France-KLM. Air France-KLM is trading at a lower price-to-earnings ratio than Ryanair, indicating that it is currently the more affordable of the two stocks.

Summary

Ryanair beats Air France-KLM on 12 of the 14 factors compared between the two stocks.

About Air France-KLM

AIR FRANCE-KLM is an airline company. The Company’s core business is passenger transport, cargo transport, and aircraft maintenance services. The Group is the world leader in terms of international passenger traffic; and its cargo activity (not including integrators) and is one of the world’s major maintenance service providers. The Group structure is simple: a holding company with two airline subsidiaries. Air France-KLM has established a set of clearly defined commitments to ensure that its strategy of profitable growth goes hand in hand with environmental quality and social progress.

About Ryanair

Ryanair Holdings plc, together with its subsidiaries, provides scheduled-passenger airline services in Ireland, the United Kingdom, Italy, Spain, and internationally. It is also involved in the provision of various ancillary services, such as non-flight scheduled and Internet-related services, as well as in-flight sale of beverages, food, duty-free, and merchandise; and markets car hire, travel insurance, and accommodation services through its website and mobile app. In addition, the company offers aircraft and passenger handling, ticketing, and maintenance and repair services; and markets car parking, fast-track, airport transfers, attractions, and activities on its website and mobile app, as well as sells gift vouchers. Ryanair Holdings plc was incorporated in 1996 and is headquartered in Swords, Ireland.