Air Canada vs American Airlines Which Is a Better Investment?

Air Canada and American Airlines are two prominent players in the airline industry, both offering a wide range of domestic and international flights. The stocks of these two companies have been closely watched by investors, as they represent key opportunities for growth and profitability in the aviation sector. While Air Canada has demonstrated strong performance in recent years, some experts believe that American Airlines may offer better long-term potential due to its larger market share and global reach. Investors are keeping a close eye on both stocks to assess their future performance and make informed investment decisions.

Air Canada or American Airlines?

When comparing Air Canada and American Airlines, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Air Canada and American Airlines.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Air Canada has a dividend yield of -%, while American Airlines has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Air Canada reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, American Airlines reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Air Canada P/E ratio at 3.25 and American Airlines's P/E ratio at 33.85. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Air Canada P/B ratio is 7.11 while American Airlines's P/B ratio is -1.92.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Air Canada has seen a 5-year revenue growth of -0.08%, while American Airlines's is -0.16%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Air Canada's ROE at 316.92% and American Airlines's ROE at -5.42%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $16.11 for Air Canada and $13.89 for American Airlines. Over the past year, Air Canada's prices ranged from $10.16 to $17.09, with a yearly change of 68.21%. American Airlines's prices fluctuated between $9.07 and $16.15, with a yearly change of 78.06%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.