LATAM Airlines Group SA Sponsored ADR (LTM) AI Stock Analysis

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LATAM Airlines Group SA Sponsored ADR

(NYSE:LTM)

Rating:77Outperform

Price Target:―

LATAM Airlines is demonstrating a strong recovery with excellent financial performance and positive market momentum. The stock is attractively valued with reasonable growth prospects. However, reliance on debt and operational challenges like engine supply chain issues pose risks. Overall, the stock presents a compelling opportunity with a positive outlook, but investors should monitor debt levels and operational challenges.

Positive Factors

Currency impact

A weaker dollar should benefit large cap US relative EPS revisions.

Trade relations

Incrementally positive news on a potential tariff deal with China and hope for a more dovish Fed lifted stocks.

Negative Factors

Earnings outlook

Further deterioration in earnings and/or corporate confidence could lead to a labor cycle and negatively impact equities.

Policy uncertainty

The back and forth on policy is likely to exacerbate uncertainty for businesses and consumers.

LATAM Airlines Group SA Sponsored ADR (LTM) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$11.42B

Dividend Yield1.67%

Average Volume (3M)587.37K

Price to Earnings (P/E)10.7

Beta (1Y)0.66

Revenue Growth6.41%

EPS Growth49.58%

CountryUS

Employees39,005

SectorIndustrials

Sector Strength93

IndustryAirlines, Airports & Air Services

Share Statistics

EPS (TTM)1.18

Shares Outstanding302,218,930

10 Day Avg. Volume490,815

30 Day Avg. Volume587,374

Financial Highlights & Ratios

PEG Ratio0.68

Price to Book (P/B)10.18

Price to Sales (P/S)0.00

P/FCF Ratio5.94

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$38.00

Price Target Upside0.03% Upside

Rating ConsensusHold

Number of Analyst Covering2

LATAM Airlines Group SA Sponsored ADR Business Overview & Revenue Model

Company DescriptionLATAM Airlines Group S.A., together with its subsidiaries, provides passenger and cargo air transportation services in Chile, Peru, Ecuador, Colombia, Brazil, other Latin American countries, the Caribbean, North America, Europe, and Oceania. It offers other services, such as ground handling, courier, logistics, and maintenance services. As of December 31, 2023, the company provides passenger transport services to 148 destinations in 26 countries and cargo services to 166 destinations in 33 countries; and operated 333 fleet of aircraft. The company was formerly known as LAN Airlines S.A. and changed its name to LATAM Airlines Group S.A. in June 2012. LATAM Airlines Group S.A. was founded in 1929 and is headquartered in Santiago, Chile.

How the Company Makes MoneyLATAM Airlines Group generates revenue primarily through its passenger and cargo transportation services. The company's main revenue stream comes from the sale of airline tickets to passengers traveling on its extensive route network. Additionally, LATAM earns income from its cargo operations, which involve the transportation of goods and freight across its passenger and dedicated cargo flights. Ancillary services, such as baggage fees, seat selection, and in-flight sales, also contribute to its revenue. The company benefits from strategic alliances and codeshare agreements with other international airlines, expanding its market reach and enhancing its service offerings. LATAM's operational efficiency and cost management strategies are vital in maintaining profitability in the highly competitive airline industry.

LATAM Airlines Group SA Sponsored ADR Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q4-2024)

% Change Since: 24.35%|

Next Earnings Date:Aug 12, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong positive sentiment from LATAM Airlines' performance in 2024, highlighted by record passenger growth, strong financial results, operational excellence, and sustainability achievements. The challenges in revenue per ASK and engine supply chain issues were noted, but the overall outlook remains optimistic.

Q4-2024 Updates

Positive Updates

Record Passenger Growth

In 2024, LATAM Airlines transported a record-breaking 82 million passengers, marking a 15% growth compared to the previous year. This solidifies LATAM's position as the largest airline group in South America.

Strong Financial Performance

LATAM Airlines achieved an adjusted operating margin of 12.7% and an adjusted EBITDAR of $3.1 billion for the year 2024. Net income nearly doubled to $977 million compared to 2023.

Operational Excellence and Customer Satisfaction

LATAM reached its highest-ever Net Promoter Score of 51 points, with 56 points for Premium passengers, and achieved the lowest rate of customer complaints in Chile, Brazil, and Peru.

Sustainability Achievements

LATAM was reincorporated into the Dow Jones Sustainability Index and recognized as the fifth most sustainable airline group worldwide, leading in the Americas and the Western Hemisphere.

Negative Updates

Revenue per ASK Decline

There was a 10% year-over-year decrease in consolidated revenues per ASK, impacted by a decline in jet fuel prices and currency depreciation in major markets like Brazil.

Engine Supply Chain Challenges

LATAM faces ongoing challenges with aircraft grounded due to engine supply chain issues from Pratt & Whitney and Rolls-Royce, impacting fleet availability.

Company Guidance

During the Fourth Quarter 2024 LATAM Airlines Group Earnings Conference Call, the management provided several key metrics and guidance for 2025. LATAM achieved a record-breaking 82 million passengers for the year, marking a 15% growth in operations and maintaining a consolidated load factor of nearly 86% for the quarter. The group also reported an adjusted operating margin of 12.7% and adjusted EBITDAR of $3.1 billion, contributing to a full-year net income of $977 million, which nearly doubled the previous year's figure. For 2025, LATAM anticipates capacity growth of 7% to 9%, with revenues projected to reach between $14 billion and $14.5 billion. The company's liquidity stands at 27% of last 12 months' revenues, with adjusted net leverage at 1.7x. The guidance for 2025 includes an adjusted EBITDAR forecast of $3.25 billion to $3.6 billion, supported by a healthy demand environment and disciplined cost management.

LATAM Airlines Group SA Sponsored ADR Financial Statement Overview

Summary

LATAM Airlines shows a strong recovery with robust profit margins and efficient cash generation. Despite reduced leverage, the company still relies significantly on debt, which is a risk if market conditions worsen. Continued revenue growth and prudent debt management are essential.

Income Statement

Very Positive

The income statement reveals a strong recovery trajectory for LATAM Airlines, with revenue increasing to $12.91 billion (TTM) from $12.83 billion annually. This growth is supported by a robust gross profit margin of 25.88% and a net profit margin of 8.32%. The consistent EBIT and EBITDA margins of 13.21% and 18.24% respectively, indicate operational efficiency. However, the revenue growth rate decelerated compared to previous years, which could be a consideration for future performance.

Balance Sheet

Positive

The balance sheet shows improved financial stability, with stockholders' equity increasing to $950 million. The debt-to-equity ratio decreased to 7.46, signifying reduced leverage. The equity ratio of 5.99% suggests that the company still relies heavily on debt, which poses a risk if market conditions worsen. The return on equity (ROE) is strong at 113.05%, reflecting effective utilization of equity to generate profit.

Cash Flow

Positive

Cash flow analysis showcases a solid performance with an operating cash flow to net income ratio of 3.04, indicating healthy cash generation relative to profitability. Free cash flow improved to $1.63 billion (TTM), though the free cash flow growth rate has decelerated. The free cash flow to net income ratio of 1.52 further emphasizes efficient cash utilization. However, high capital expenditures could impact future cash flows.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
12.91B	12.83B	11.64B	9.52B	4.88B	4.33B
	Gross Profit
3.34B	3.27B	2.82B	2.48B	-79.47M	-444.11M
	EBIT
1.71B	1.54B	1.08B	134.87M	-3.43B	-1.67B
	EBITDA
2.36B	2.34B	1.28B	2.26B	-3.34B	-4.52B
	Net Income Common Stockholders
1.07B	976.97M	581.83M	1.34B	-4.65B	-4.55B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.21B	1.96B	1.85B	1.72B	1.12B	1.75B
	Total Assets
15.86B	15.25B	14.67B	13.21B	13.31B	15.65B
	Total Debt
7.09B	7.15B	7.04B	6.78B	10.40B	10.85B
	Net Debt
4.94B	5.19B	5.32B	5.57B	9.35B	9.16B
	Total Liabilities
14.92B	14.54B	14.23B	13.18B	20.38B	18.09B
	Stockholders Equity
950.08M	723.27M	450.30M	42.28M	-7.06B	-2.44B
Cash Flow		Free Cash Flow
1.63B	1.69B	1.40B	-733.86M	-859.86M	-894.39M
	Operating Cash Flow
3.27B	3.11B	2.26B	96.80M	-184.10M	-494.70M
	Investing Cash Flow
-1.46B	-1.17B	-659.50M	-748.96M	-542.65M	33.61M
	Financing Cash Flow
-1.50B	-1.56B	-1.15B	854.96M	109.64M	1.12B

LATAM Airlines Group SA Sponsored ADR Technical Analysis

Technical Analysis Sentiment

Positive

Last Price37.99

Price Trends

50DMA

32.00

Positive

100DMA

30.81

Positive

200DMA

28.40

Positive

Market Momentum

MACD

1.79

Negative

RSI

77.43

Negative

STOCH

85.37

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LTM, the sentiment is Positive. The current price of 37.99 is above the 20-day moving average (MA) of 34.86, above the 50-day MA of 32.00, and above the 200-day MA of 28.40, indicating a bullish trend. The MACD of 1.79 indicates Negative momentum. The RSI at 77.43 is Negative, neither overbought nor oversold. The STOCH value of 85.37 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LTM.

LATAM Airlines Group SA Sponsored ADR Risk Analysis

LATAM Airlines Group SA Sponsored ADR disclosed 48 risk factors in its most recent earnings report. LATAM Airlines Group SA Sponsored ADR reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

Holders of ADSs may be adversely affected by their limited voting rights. Q4, 2024

Our business may experience adverse consequences due to collective action by LATAM group employees or third-party employees, including disruptions from strikes or other labor-related actions. Q4, 2024

We face reputational risks related to misinformation and disinformation Q4, 2024

LATAM Airlines Group SA Sponsored ADR Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CPA	82 Outperform	$4.47B	7.39	26.07%	5.93%	-1.06%	5.86%
LTM	77 Outperform	$11.42B	10.67	138.69%	1.67%	6.41%	49.58%
UAL	76 Outperform	$25.53B	7.13	33.57%	―	5.31%	35.95%
Sector *	65 Neutral	$4.45B	12.17	5.23%	249.78%	4.08%	-12.31%
AAL	62 Neutral	$7.68B	13.44	-21.27%	―	1.92%	36.07%
LUV	59 Neutral	$18.61B	38.78	5.63%	2.20%	3.26%	27.77%
JBLU	48 Neutral	$1.92B	―	-11.30%	―	-3.02%	66.90%

* Industrials Sector Average

Performance Comparison

LTM

LATAM Airlines Group SA Sponsored ADR

38.04

13.32

53.88%

CPA

Copa Holdings

109.55

17.26

18.70%

JBLU

JetBlue Airways

5.22

0.04

0.77%

LUV

Southwest Airlines

32.89

7.97

31.98%

UAL

United Airlines Holdings

77.50

25.67

49.53%

AAL

American Airlines

11.43

-0.19

-1.64%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.