Critical Analysis: Japan Airlines (JAPSY) and The Competition

Japan Airlines (OTCMKTS:JAPSY) is one of 78 public companies in the “Passenger Airlines” industry, but how does it weigh in compared to its rivals? We will compare Japan Airlines to related companies based on the strength of its valuation, profitability, dividends, analyst recommendations, earnings, risk and institutional ownership.

Dividends

Japan Airlines pays an annual dividend of $0.18 per share and has a dividend yield of 1.9%. Japan Airlines pays out 21.2% of its earnings in the form of a dividend. As a group, “Passenger Airlines” companies pay a dividend yield of 1.6% and pay out 23.6% of their earnings in the form of a dividend. Japan Airlines is clearly a better dividend stock than its rivals, given its higher yield and lower payout ratio.

Volatility & Risk

Japan Airlines has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500. Comparatively, Japan Airlines’ rivals have a beta of 17.40, meaning that their average stock price is 1,640% more volatile than the S&P 500.

Profitability

This table compares Japan Airlines and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Japan Airlines	5.68%	8.82%	3.72%
Japan Airlines Competitors	-17.95%	6.05%	1.13%

Analyst Ratings

This is a summary of current ratings for Japan Airlines and its rivals, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Japan Airlines	0	1	0	0	2.00
Japan Airlines Competitors	1524	4058	6675	353	2.46

As a group, “Passenger Airlines” companies have a potential upside of 15.80%. Given Japan Airlines’ rivals stronger consensus rating and higher possible upside, analysts clearly believe Japan Airlines has less favorable growth aspects than its rivals.

Insider and Institutional Ownership

41.8% of shares of all “Passenger Airlines” companies are owned by institutional investors. 10.5% of shares of all “Passenger Airlines” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Japan Airlines and its rivals top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Japan Airlines	$13.37 billion	$860.68 million	11.40
Japan Airlines Competitors	$15.07 billion	$637.69 million	18.56

Japan Airlines’ rivals have higher revenue, but lower earnings than Japan Airlines. Japan Airlines is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Summary

Japan Airlines rivals beat Japan Airlines on 9 of the 15 factors compared.

Japan Airlines Company Profile

Japan Airlines Co., Ltd., together with its subsidiaries, provides scheduled and non-scheduled air transport services in Japan, Asia, Oceania, North America, and Europe. The company operates through Air Transportation and Other segments. It offers passenger, ground handling, cargo and mail handling, and maintenance services. The company is also involved in the aerial work and other related business; airport peripheral business; and sale of travel package tours. As of March 31, 2023, it operated a fleet of 224 aircraft. The company was formerly known as Japan Airlines International Co., Ltd. and changed its name to Japan Airlines Co., Ltd. in April 2011. The company was founded in 1951 and is headquartered in Tokyo, Japan.