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)

61Neutral

Controladora Vuela's stock demonstrates strong operational efficiency and cash flow generation, but faces significant challenges with high leverage and declining revenue. The technical analysis suggests a bearish trend, though the stock is undervalued based on its low P/E ratio. The earnings call underscored operational strengths but also highlighted revenue pressures and revised growth guidance due to external challenges. These mixed factors result in a moderate overall stock score.

Positive Factors

Financial Position

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

Partnerships

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

Negative Factors

Market Challenges

Domestic Mexican market supply issues and uncertain US trade policy create additional challenges for the company.

Revenue Performance

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. S&P 500 (SPY)

Market Cap

$466.06M

Dividend YieldN/A

Average Volume (3M)1.34M

Price to Earnings (P/E)3.6

Beta (1Y)1.16

Revenue Growth-7.43%

EPS Growth-62.49%

CountryUS

Employees6,901

SectorIndustrials

Sector Strength75

IndustryAirlines, Airports & Air Services

Share Statistics

EPS (TTM)1.09

Shares Outstanding116,597,670

10 Day Avg. Volume1,783,720

30 Day Avg. Volume1,336,217

Financial Highlights & Ratios

PEG Ratio0.00246

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap7.78

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit3.27

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$8.82

Price Target Upside139.67% Upside

Rating ConsensusStrong 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., 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 revenue through multiple streams, with the primary source being passenger ticket sales. The company employs a low-cost carrier model, allowing it to offer competitive fares by optimizing operational efficiencies and maintaining a high aircraft utilization rate. Additional revenue is derived from ancillary services, which include baggage fees, seat selection, in-flight sales, and other add-ons that enhance the travel experience. The airline also benefits from partnerships and alliances with other travel-related businesses, contributing to its overall profitability.

Controladora Vuela Compania de Aviacion SAB de CV Financial Statement Overview

Summary

Controladora Vuela has strong operational efficiency with robust cash flow generation. However, the high leverage remains a financial risk, and there's room for improved profitability. Cost management is effective, but the significant debt level is a concern.

Income Statement

Positive

Controladora Vuela has shown a stable revenue trend with recent total revenue of $3.14 billion, although there was a decline from the previous year. The company has improved its gross profit margin to 35.28%, indicating better cost management. The net profit margin stands at 4.01%, showing profitability but with room for improvement. EBIT and EBITDA margins are strong, reflecting efficient operational management.

Balance Sheet

Neutral

The debt-to-equity ratio remains high at 10.61, indicating significant leverage, which poses a financial risk. However, the equity ratio has improved to 6.4%, suggesting better equity financing. ROE at 34.52% reflects efficient use of equity to generate profits, but the high leverage is a concern.

Cash Flow

Positive

Free cash flow has seen significant growth, and the company has robust operating cash flow, exceeding net income, indicating strong cash generation capabilities. The free cash flow to net income ratio is favorable, highlighting efficient cash management.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.14B	3.26B	2.85B	2.18B	1.11B
	Gross Profit
1.11B	505.20M	246.00M	544.61M	12.77M
	EBIT
413.00M	222.71M	34.00M	74.03M	―
	EBITDA
1.01B	722.52M	477.05M	600.99M	143.59M
	Net Income Common Stockholders
126.00M	7.82M	-30.00M	106.45M	―
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
954.00M	776.48M	704.98M	745.38M	507.82M
	Total Assets
5.70B	5.15B	4.52B	4.01B	3.43B
	Total Debt
3.87B	3.54B	2.98B	2.73B	2.49B
	Net Debt
2.96B	2.78B	2.28B	1.99B	1.98B
	Total Liabilities
5.34B	4.90B	4.24B	3.69B	3.29B
	Stockholders Equity
365.00M	242.59M	277.00M	319.16M	140.54M
Cash Flow		Free Cash Flow
1.09B	238.69M	260.06M	580.97M	67.30M
	Operating Cash Flow
1.09B	729.83M	614.00M	775.38M	243.28M
	Investing Cash Flow
-472.00M	-462.04M	-131.00M	―	―
	Financing Cash Flow
-472.00M	-214.39M	-513.00M	―	―

Controladora Vuela Compania de Aviacion SAB de CV Technical Analysis

Technical Analysis Sentiment

Negative

Last Price3.68

Price Trends

50DMA

5.56

Negative

100DMA

6.86

Negative

200DMA

6.72

Negative

Market Momentum

MACD

-0.42

Positive

RSI

22.51

Positive

STOCH

23.04

Neutral

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 3.68 is below the 20-day moving average (MA) of 4.65, below the 50-day MA of 5.56, and below the 200-day MA of 6.72, indicating a bearish trend. The MACD of -0.42 indicates Positive momentum. The RSI at 22.51 is Positive, neither overbought nor oversold. The STOCH value of 23.04 is Neutral, 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 (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATSG	69 Neutral	$1.48B	55.88	1.92%	―	-5.25%	-49.90%
Sector *	63 Neutral	$4.23B	11.54	5.34%	209.77%	4.14%	-9.49%
SNCY	61 Neutral	$494.90M	9.73	9.75%	―	2.49%	-22.41%
VLRS	61 Neutral	$466.06M	3.60	14.19%	―	-7.43%	-62.49%
ULCC	58 Neutral	$726.29M	8.65	15.12%	―	5.18%	―
ALGT	48 Neutral	$840.63M	―	-19.93%	5.15%	0.11%	-311.73%
FLYX	39 Underperform	$224.36M	28.86	26.01%	―	―	―

* Industrials Sector Average

Performance Comparison

VLRS

Controladora Vuela Compania de Aviacion SAB de CV

3.68

-4.58

-55.45%

ATSG

Air Transport Services

22.48

9.71

76.04%

ALGT

Allegiant Travel Company

46.93

-6.19

-11.65%

SNCY

Sun Country Airlines Holdings

9.80

-3.70

-27.41%

ULCC

Frontier Group Holdings

2.98

-2.86

-48.97%

FLYX

flyExclusive

2.78

-1.71

-38.08%

Controladora Vuela Compania de Aviacion SAB de CV Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q1-2025)

% Change Since: -21.37%|

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.

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.