SkyWest (NASDAQ: SKYW) and Delta Air Lines (NYSE:DAL) are both mid-cap transportation companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, valuation, institutional ownership and dividends.

Profitability

This table compares SkyWest and Delta Air Lines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SkyWest -4.15% 11.87% 3.18%
Delta Air Lines 8.97% 26.50% 6.77%

Volatility and Risk

SkyWest has a beta of 1.74, meaning that its share price is 74% more volatile than the S&P 500. Comparatively, Delta Air Lines has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Dividends

SkyWest pays an annual dividend of $0.32 per share and has a dividend yield of 0.6%. Delta Air Lines pays an annual dividend of $1.22 per share and has a dividend yield of 2.4%. SkyWest pays out -12.3% of its earnings in the form of a dividend. Delta Air Lines pays out 24.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. SkyWest has increased its dividend for 3 consecutive years.

Earnings and Valuation

This table compares SkyWest and Delta Air Lines’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
SkyWest $3.12 billion 0.84 -$161.58 million ($2.61) -19.31
Delta Air Lines $39.64 billion 0.91 $4.37 billion $4.99 10.10

Delta Air Lines has higher revenue and earnings than SkyWest. SkyWest is trading at a lower price-to-earnings ratio than Delta Air Lines, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

89.0% of SkyWest shares are held by institutional investors. Comparatively, 86.8% of Delta Air Lines shares are held by institutional investors. 3.5% of SkyWest shares are held by company insiders. Comparatively, 0.4% of Delta Air Lines shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for SkyWest and Delta Air Lines, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SkyWest 0 2 2 1 2.80
Delta Air Lines 0 0 14 0 3.00

SkyWest presently has a consensus price target of $47.75, indicating a potential downside of 5.26%. Delta Air Lines has a consensus price target of $65.00, indicating a potential upside of 28.94%. Given Delta Air Lines’ stronger consensus rating and higher possible upside, analysts clearly believe Delta Air Lines is more favorable than SkyWest.

Summary

Delta Air Lines beats SkyWest on 11 of the 18 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 Delta Air Lines

Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo throughout the United States and across the world. The Company’s segments include Airline and Refinery. The Company’s route network is centered around a system of hub, international gateway and airports that the Company operates in Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los Angeles, Minneapolis-St. Paul, New York-LaGuardia, New York- John F Kennedy International Airport, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Each of these operations includes flights that gather and distribute traffic from markets in the geographic region surrounding the hub or gateway to domestic and international cities and to other hubs or gateways. The Company’s route network includes its international joint ventures, its alliances with other foreign airlines, its membership in SkyTeam and agreements with multiple domestic regional carriers that operate as Delta Connection.

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