Grupo Aeromexico, S.A.B. de C.V. (NYSE: AERO)

Sector: Industrials Industry: Airlines CIK: 0001561861
Market Cap 2.64 Bn
P/B -4.46
P/E 7.49
P/S 0.49
ROIC (Qtr) 25.96
Div Yield % 0.00
Rev 1y % (Qtr) 0.21
Total Debt (Qtr) 4.06 Bn
Debt/Equity (Qtr) -6.85
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About

Investment thesis

Bull case

  • Healthy cash reserves of 1.02B provide 2.27x coverage of short-term debt 451M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong operating cash flow of 913M provides 2x coverage of SG&A expenses 456M, showing efficient operational cost management.
  • Cash reserves of 1.02B provide solid 0.94x coverage of other non-current liabilities 1.08B, indicating strong liquidity.
  • Operating cash flow of 913M provides strong 5.25x coverage of inventory 174M, indicating efficient inventory management.
  • Cash reserves of 1.02B exceed inventory value of 174M by 5.89x, indicating strong liquidity and inventory management.

Bear case

  • Operating cash flow of 913M barely covers its investment activities of (270M), with a coverage ratio of -3.38, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • High receivables of 703M relative to inventory of 174M (4.04 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Tangible assets of 7.19B provide limited backing for working capital of (1.12B), which is -6.45x, suggesting increased operational risk in market downturns.
  • R&D investment of 0 represents just 0x of SG&A expenses of 456M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Other operating expenses of 649M consume 0.71x of operating cash flow 913M, indicating potential cost control issues affecting cash generation.

Peer comparison

Companies in the Airlines
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 DAL Delta Air Lines, Inc. 45.93 Bn 9.18 0.72 20.27 Bn
2 UAL United Airlines Holdings, Inc. 37.05 Bn 11.05 0.63 31.04 Bn
3 LUV Southwest Airlines Co 29.18 Bn 66.17 1.04 5.98 Bn
4 AAL American Airlines Group Inc. 9.42 Bn 15.65 0.17 36.06 Bn
5 ALK Alaska Air Group, Inc. 6.72 Bn 67.15 0.47 6.89 Bn
6 SKYW Skywest Inc 4.33 Bn 10.12 1.07 2.47 Bn
7 AERO Grupo Aeromexico, S.A.B. de C.V. 2.64 Bn 7.49 0.49 4.06 Bn
8 JBLU Jetblue Airways Corp 2.20 Bn -3.66 0.24 9.42 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.00 0.75
EV to Cash from Ops. EV to Cash from Ops. 0.00 -1.78
EV to Debt EV to Debt 0.00 1.92
EV to EBIT EV to EBIT 0.00 12.70
EV to EBITDA EV to EBITDA 0.00 -7.83
EV to Free Cash Flow [EV/FCF] EV to Free Cash Flow [EV/FCF] 0.00 4.43
EV to Market Cap EV to Market Cap 0.00 2.37
EV to Revenue EV to Revenue 0.00 1.05
Price to Book Value [P/B] P/B -4.46 0.89
Price to Earnings [P/E] P/E 7.49 14.33
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 22,529.03
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 7.43
Dividend per Basic Share Div per Share (Qtr) 0.00 0.11
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -2.56
Interest Coverage Interest Coverage 0.00 1.76
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.00 -69.47
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 21.62 40.07
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 2.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -42.95 -58.97
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.00 80.32
EBIT Growth (1y) % EBIT 1y % (Qtr) -40.60 -22.88
EBT Growth (1y) % EBT 1y % (Qtr) -40.60 -112.97
EPS Growth (1y) % EPS 1y % (Qtr) 0.00 -167.26
FCF Growth (1y) % FCF 1y % (Qtr) -33.26 2,772.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -10.16 7.74
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.75 0.74
Cash Payout Ratio Cash Payout Ratio 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.33 0.24
Current Ratio Curr Ratio (Qtr) 0.64 0.56
Debt to Equity Ratio Debt/Equity (Qtr) -6.85 0.61
Interest Cover Ratio Interest Cover Ratio 0.00 1.76
Times Interest Earned Times Interest Earned 0.00 1.76
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 0.00 5.51
EBIT Margin % EBIT Margin % (Qtr) 7.72 -0.22
EBT Margin % EBT Margin % (Qtr) 7.72 -3.82
Gross Margin % Gross Margin % (Qtr) 38.40 41.52
Net Profit Margin % Net Margin % (Qtr) 6.60 -4.40