Surf Air Mobility Inc. (NYSE: SRFM)

Sector: Industrials Industry: Airlines CIK: 0001936224
Market Cap 59.51 Mn
P/B -0.64
P/E -0.82
P/S 0.55
ROIC (Qtr) 221.36
Div Yield % 0.00
Rev 1y % (Qtr) 2.77
Total Debt (Qtr) 84.78 Mn
Debt/Equity (Qtr) -0.92
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About

Surf Air Mobility Inc., commonly referred to as SRFM, is a company that operates in the air mobility industry, with a particular focus on commercializing green regional aviation at scale. The company aims to reduce the cost and environmental impact of regional flying through its regional air mobility platform, which includes scheduled and on-demand regional flights for passengers across the United States. Surf Air Mobility operates its own flights and uses third-party aircraft to serve its customers, with a fleet of Cessna Caravan aircraft that...

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Investment thesis

Bull case

  • Tangible assets of 85.98M provide exceptional 5.38x coverage of deferred revenue 15.97M, showing strong service capability backing.
  • Retained earnings of (751.12M) represent substantial 8.12x of equity (92.56M), indicating strong internal capital generation.
  • R&D investment of 13.40M represents healthy 0.84x of deferred revenue 15.97M, indicating strong future innovation pipeline.
  • Robust R&D investment of 13.40M at 0.52x of SG&A 25.80M demonstrates strong commitment to innovation and future growth.
  • Operating cash flow of (69.37M) exceeds working capital of (66.11M) by 1.05x, showing strong operational efficiency.

Bear case

  • Investment activities of (2.44M) provide weak support for R&D spending of 13.40M, which is -0.18x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of (69.37M) provides insufficient coverage of deferred revenue obligations of 15.97M, which is -4.34x, raising concerns about future service delivery capabilities.
  • Free cash flow of (71.81M) provides weak coverage of capital expenditures of 2.44M, with a -29.37 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (58.92M) show weak coverage of depreciation charges of 14.63M, with a -4.03 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of (71.81M) represents just -2.72x of debt issuance 26.36M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

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 1.09 0.75
EV to Cash from Ops. EV/CFO -1.68 -1.78
EV to Debt EV to Debt 1.38 1.92
EV to EBIT EV/EBIT -1.98 12.70
EV to EBITDA EV/EBITDA -4.13 -7.83
EV to Free Cash Flow [EV/FCF] EV/FCF -1.62 4.43
EV to Market Cap EV to Market Cap 1.96 2.37
EV to Revenue EV/Rev 1.08 1.05
Price to Book Value [P/B] P/B -0.64 0.89
Price to Earnings [P/E] P/E -0.82 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 Int. cover (Qtr) -4.25 1.76
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -453.17 -69.47
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 534.31 40.07
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 2.71
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 67.46 -58.97
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 82.69 80.32
EBIT Growth (1y) % EBIT 1y % (Qtr) 67.27 -22.88
EBT Growth (1y) % EBT 1y % (Qtr) 61.08 -112.97
EPS Growth (1y) % EPS 1y % (Qtr) 84.42 -167.26
FCF Growth (1y) % FCF 1y % (Qtr) -42.26 2,772.29
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -19.99 7.74
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.01 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.08 0.24
Current Ratio Curr Ratio (Qtr) 0.25 0.56
Debt to Equity Ratio Debt/Equity (Qtr) -0.92 0.61
Interest Cover Ratio Int Coverage (Qtr) -4.25 1.76
Times Interest Earned Times Interest Earned (Qtr) -4.25 1.76
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -40.90 5.51
EBIT Margin % EBIT Margin % (Qtr) -54.47 -0.22
EBT Margin % EBT Margin % (Qtr) -67.29 -3.82
Gross Margin % Gross Margin % (Qtr) 5.10 41.52
Net Profit Margin % Net Margin % (Qtr) -67.00 -4.40