Controladora Vuela Compania de Aviacion SAB de CV (VLRS) AI Stock Analysis

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Controladora Vuela Compania de Aviacion SAB de CV

(NYSE:VLRS)

Rating:65Neutral

Price Target:

$5.00

▲(1.42%Upside)

Volaris is navigating through a challenging environment with a focus on operational efficiency and strategic initiatives, such as strong ancillary revenue and load factors. However, high leverage, declining revenues, and reduced growth guidance pose significant risks. The stock's valuation is reasonable, but technical indicators suggest only modest near-term upside.

Positive Factors

Capacity and Yield Developments

Capacity discipline in the market and a sequentially better yield environment in the second half are seen as positive developments.

Cash Position

The company has a strong cash position, which is expected to help it navigate the current challenging period.

Traffic and Growth Strategy

Volaris announced that it will be signing a code-share with Copa for traffic between Mexico and South/Central America.

Negative Factors

Earnings Guidance

The company's new 2Q guide suggests material downside to prior estimates, driven by weaker capacity and lower yields.

Macro Uncertainty

Increased macro uncertainty is expected to weigh on the investment case.

Revenue Metrics

A significant drop in yields and ancillary revenue per passenger has negatively affected the company's revenue metrics.

Controladora Vuela Compania de Aviacion SAB de CV (VLRS) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$567.64M

Dividend YieldN/A

Average Volume (3M)831.05K

Price to Earnings (P/E)13.5

Beta (1Y)1.15

Revenue Growth-7.43%

EPS Growth-62.49%

CountryUS

Employees6,901

SectorIndustrials

Sector Strength91

IndustryAirlines, Airports & Air Services

Share Statistics

EPS (TTM)-0.44

Shares Outstanding116,597,670

10 Day Avg. Volume763,560

30 Day Avg. Volume831,050

Financial Highlights & Ratios

PEG Ratio2.49

Price to Book (P/B)34.86

Price to Sales (P/S)0.00

P/FCF Ratio37.13

Enterprise Value/Market Cap21.02

Enterprise Value/Revenue0.94

Enterprise Value/Gross Profit22.06

Enterprise Value/Ebitda5.97

Forecast

1Y Price Target

$6.63

Price Target Upside34.48% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering10

Controladora Vuela Compania de Aviacion SAB de CV Business Overview & Revenue Model

Company DescriptionControladora Vuela Compañía de Aviación, S.A.B. de C.V., through its subsidiaries, Concesionaria Vuela Compañía de Aviación, S.A.P.I. de C.V., provides air transportation services for passengers, cargo, and mail in Mexico and internationally. The company operates approximately 410 daily flights on routes connecting 43 cities in Mexico, 22 cities in the United States, and 3 cities in Central America. As of December 31, 2020, it operated through a fleet of 86 aircraft. The company also offers merchandising, recruitment and payroll, travel agency, and loyalty program services. Controladora Vuela Compañía de Aviación, S.A.B. de C.V. was incorporated in 2005 and is headquartered in Mexico City, Mexico.

How the Company Makes MoneyVolaris generates its revenue primarily through passenger ticket sales, leveraging its low-cost carrier model to attract a large volume of budget-conscious travelers. The airline offers a basic fare that covers essential travel needs, with a range of ancillary services available for an additional fee. These ancillary services include seat selection, checked baggage, in-flight refreshments, and priority boarding, which contribute significantly to the company's earnings. Volaris also benefits from partnerships with various service providers, such as hotels and car rental companies, earning commission-based revenue. The airline's cost-efficient operations, including a fuel-efficient fleet and high aircraft utilization rates, further support its profitability.

Controladora Vuela Compania de Aviacion SAB de CV Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q1-2025)

% Change Since: 5.34%|

Next Earnings Date:Jul 21, 2025

Earnings Call Sentiment Neutral

The call highlighted Volaris' operational strengths and strategic initiatives, including high load factors and strong ancillary revenue contributions. However, it also underscored significant challenges such as declining revenues and EBITDA margins, as well as reduced capacity growth due to geopolitical uncertainties.

Q1-2025 Updates

Positive Updates

Strong Ancillary Revenue Contribution

Ancillary revenue accounted for over 50% of total quarterly revenue, supporting the diversified revenue model despite base fare pressures.

High Operational Efficiency

The company reported a scheduled completion rate of 99.6% and an on-time performance of 83.8%, showcasing operational efficiency.

Expansion of Strategic Partnerships

Volaris announced a new codeshare agreement with Copa Airlines, enhancing connectivity between Mexico and Latin America.

Strong Load Factors

Maintained high load factors with 89% in the Mexican domestic market and a consolidated load factor of 85%.

Negative Updates

Significant Decline in Revenue

Total operating revenues decreased by 12% year-over-year, partly due to the 20% depreciation of the Mexican peso against the U.S. dollar.

EBITDA Margin Pressure

First quarter EBITDA was a loss of $10 million, representing a margin of minus 1.5%.

Reduced Capacity Growth

ASM growth guidance was revised down from 13% to 15% to 8% to 9% for the full year 2025 due to geopolitical and economic uncertainties.

Decline in TRASM

TRASM fell by 17% in the quarter to $0.078, driven by currency depreciation and challenging market conditions.

Company Guidance

During the first quarter of 2025, Volaris demonstrated resilience amidst geopolitical and economic uncertainties by delivering results aligned with their guidance. The airline reported a consolidated load factor of 85%, a slight decrease from the previous year, and a domestic load factor of 89%. Despite a 17% decline in TRASM to $0.078, Volaris maintained a competitive edge through fare modulation and ancillary revenue strategies, with ancillary revenue accounting for over 50% of total revenue. The airline's operational metrics remained strong, with an on-time performance of 83.8% and a scheduled completion rate of 99.6%. Volaris revised its ASM growth guidance for 2025 to 8-9%, down from 13-15%, to better align with demand and protect profitability. The company ended the quarter with a total liquidity of $862 million and a net debt-to-EBITDA ratio of 2.7x. Looking forward, Volaris remains focused on flexibility in capacity management and is optimistic about a demand recovery in the second half of the year, supported by its ultra-low-cost carrier model and strategic initiatives.

Controladora Vuela Compania de Aviacion SAB de CV Financial Statement Overview

Summary

The company shows a mixed performance with declining revenue growth and high leverage posing risks. However, improvements in profitability and strong cash flow management are positive signs.

Income Statement

Positive

The company shows a mixed performance with a declining revenue growth trend, dropping from $3.26 billion in 2023 to $3.05 billion in TTM 2025. Gross profit margin has decreased significantly in TTM 2025, indicating potential challenges in maintaining profitability. However, the net profit margin in TTM 2025 has improved to 1.38% from previous losses, showing signs of recovering profitability. EBIT and EBITDA margins have also improved slightly, indicating better cost management.

Balance Sheet

Neutral

The balance sheet reflects high leverage with a debt-to-equity ratio of approximately 12.15 in TTM 2025, which poses a financial risk. Return on equity (ROE) improved to 13.33% in TTM 2025, reflecting better utilization of equity but still constrained by high debt levels. The equity ratio remains low, indicating limited buffer against liabilities.

Cash Flow

Positive

Cash flow analysis reveals strong operational cash generation with an operating cash flow to net income ratio of 23.45 in TTM 2025. Free cash flow has shown significant growth compared to previous years, which is a positive indicator for future liquidity and investment capabilities. The company demonstrates efficient cash management despite ongoing challenges.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.05B	3.14B	3.26B	2.85B	2.18B	1.11B
Gross Profit	541.00M	1.11B	505.20M	246.00M	544.61M	12.77M
EBITDA	571.00M	1.07B	722.52M	477.05M	600.99M	143.59M
Net Income	42.00M	126.00M	7.82M	-30.00M	106.45M	―
Balance Sheet
Total Assets	5.69B	5.70B	5.15B	4.52B	4.01B	3.43B
Cash, Cash Equivalents and Short-Term Investments	862.37M	954.00M	776.48M	704.98M	745.38M	507.82M
Total Debt	3.83B	3.87B	3.54B	2.98B	2.73B	2.49B
Total Liabilities	5.37B	5.34B	4.90B	4.24B	3.69B	3.29B
Stockholders Equity	314.97M	365.00M	242.59M	277.00M	319.16M	140.54M
Cash Flow
Free Cash Flow	907.19M	1.09B	238.69M	260.06M	580.97M	67.30M
Operating Cash Flow	985.06M	1.09B	729.83M	614.00M	775.38M	243.28M
Investing Cash Flow	-381.28M	-472.00M	-462.04M	-131.00M	―	―
Financing Cash Flow	-495.36M	-472.00M	-214.39M	-513.00M	―	―

Controladora Vuela Compania de Aviacion SAB de CV Technical Analysis

Technical Analysis Sentiment

Positive

Last Price4.93

Price Trends

50DMA

4.45

Positive

100DMA

5.00

Negative

200DMA

6.32

Negative

Market Momentum

MACD

0.06

Negative

RSI

59.38

Neutral

STOCH

67.76

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VLRS, the sentiment is Positive. The current price of 4.93 is above the 20-day moving average (MA) of 4.56, above the 50-day MA of 4.45, and below the 200-day MA of 6.32, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 59.38 is Neutral, neither overbought nor oversold. The STOCH value of 67.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VLRS.

Controladora Vuela Compania de Aviacion SAB de CV Risk Analysis

Controladora Vuela Compania de Aviacion SAB de CV disclosed 70 risk factors in its most recent earnings report. Controladora Vuela Compania de Aviacion SAB de CV reported the most risks in the "Finance & Corporate" category.

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

Latest Risks Added 0 New Risks

Controladora Vuela Compania de Aviacion SAB de CV Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SNCY	77 Outperform	$687.98M	13.23	9.46%	―	2.24%	-20.24%
ATSG	69 Neutral	$1.48B	55.88	1.92%	―	-5.25%	-49.90%
VLRS	65 Neutral	$567.64M	13.51	14.19%	―	-7.43%	-62.49%
Sector *	61 Neutral	C$6.63B	7.56	3.42%	2.77%	6.63%	-23.02%
ULCC	53 Neutral	$947.50M	14.07	12.71%	―	5.99%	―
ALGT	52 Neutral	$995.25M	―	-17.12%	1.10%	1.54%	-466.46%
FLYX	47 Neutral	$192.31M	28.86	26.01%	―	―	―

* Industrials Sector Average

Performance Comparison

VLRS

Controladora Vuela Compania de Aviacion SAB de CV

4.93

-1.73

-25.98%

ATSG

Air Transport Services

22.48

7.15

46.64%

ALGT

Allegiant Travel Company

54.52

3.97

7.85%

SNCY

Sun Country Airlines Holdings

12.93

0.47

3.77%

ULCC

Frontier Group Holdings

4.16

-0.11

-2.58%

FLYX

flyExclusive

2.40

-1.76

-42.31%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 11, 2025