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:66Neutral

Price Target:

$5.00

▲(8.93%Upside)

The overall stock score reflects strong cash flow and reasonable valuation. However, high debt levels, declining revenues, and technical weakness present significant risks. Earnings call insights highlight operational strengths but also underline challenges in revenue and margin pressures.

Positive Factors

Financial Resilience

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

Market Conditions

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

Strategic Partnerships

Volaris announced a code-share agreement with Copa for traffic between Mexico and South/Central America.

Negative Factors

Earnings Forecast

Material cuts to 2025 and 2026 EBITDAR estimates are being made, influenced by macro and yield uncertainty.

Macroeconomic Uncertainty

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

Revenue Challenges

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

$532.43M

Dividend YieldN/A

Average Volume (3M)1.20M

Price to Earnings (P/E)12.6

Beta (1Y)1.08

Revenue Growth-7.43%

EPS Growth-62.49%

CountryUS

Employees6,901

SectorIndustrials

Sector Strength85

IndustryAirlines, Airports & Air Services

Share Statistics

EPS (TTM)-0.44

Shares Outstanding116,597,670

10 Day Avg. Volume778,639

30 Day Avg. Volume1,201,109

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 Cap22.41

Enterprise Value/Revenue0.94

Enterprise Value/Gross Profit22.06

Enterprise Value/Ebitda5.97

Forecast

1Y Price Target

$6.37

Price Target Upside38.78% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering9

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

Company DescriptionControladora Vuela Compañía de Aviación, S.A.B. de C.V. (VLRS), commonly known as Volaris, is a prominent low-cost airline operating primarily in Mexico, with additional routes in the United States and Central America. Volaris focuses on providing affordable air travel through efficient operations, a point-to-point route network, and a streamlined service model. The airline targets cost-conscious travelers, offering a no-frills flying experience with optional add-on services.

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: -1.92%|

Next Earnings Date:Jul 28, 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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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
	EBIT
299.00M	413.00M	222.71M	34.00M	74.03M	―
	EBITDA
571.00M	1.07B	722.52M	477.05M	600.99M	143.59M
	Net Income Common Stockholders
42.00M	126.00M	7.82M	-30.00M	106.45M	―
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
862.37M	954.00M	776.48M	704.98M	745.38M	507.82M
	Total Assets
5.69B	5.70B	5.15B	4.52B	4.01B	3.43B
	Total Debt
3.83B	3.87B	3.54B	2.98B	2.73B	2.49B
	Net Debt
2.98B	2.96B	2.78B	2.28B	1.99B	1.98B
	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

Negative

Last Price4.59

Price Trends

50DMA

4.44

Positive

100DMA

5.63

Negative

200DMA

6.46

Negative

Market Momentum

MACD

0.06

Positive

RSI

49.98

Neutral

STOCH

16.82

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VLRS, the sentiment is Negative. The current price of 4.59 is below the 20-day moving average (MA) of 4.60, above the 50-day MA of 4.44, and below the 200-day MA of 6.46, indicating a neutral trend. The MACD of 0.06 indicates Positive momentum. The RSI at 49.98 is Neutral, neither overbought nor oversold. The STOCH value of 16.82 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SNCY	75 Outperform	$599.12M	11.52	9.46%	―	2.24%	-20.24%
Sector *	66 Neutral	$4.50B	12.26	5.40%	3.65%	4.17%	-12.02%
VLRS	66 Neutral	$532.43M	12.58	14.19%	―	-7.43%	-62.49%
ALGT	54 Neutral	$990.05M	―	-17.12%	1.11%	1.54%	-466.46%
ULCC	53 Neutral	$817.67M	12.14	12.71%	―	5.99%	―
FLYX	52 Neutral	$218.75M	28.86	26.01%	―	―	―

* Industrials Sector Average

Performance Comparison

VLRS

Controladora Vuela Compania de Aviacion SAB de CV

4.59

-2.01

-30.45%

ALGT

Allegiant Travel Company

54.24

1.39

2.63%

SNCY

Sun Country Airlines Holdings

11.26

0.98

9.53%

ULCC

Frontier Group Holdings

3.59

-1.73

-32.52%

FLYX

flyExclusive

2.73

-1.67

-37.95%

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.