We recently published a list of the 10 Worst Airport Stocks to Buy. In this article, we are going to take a look at where Aena S.M.E., S.A. (OTC:ANNSF) stands against the other airport stocks to buy.
Air travel plays a significant role in the global economy as it directly contributes to economic growth by facilitating trade and tourism. The aviation industry generates millions of jobs worldwide, both directly and indirectly.
The industry was hit quite hard by the pandemic and later the Russia-Ukraine conflict. However, it has experienced a remarkable resurgence in passenger demand, which is surpassing pre-pandemic levels and signaling a strong recovery for the aviation industry.
Bain & Company forecasts reveal that annual air travel demand is on track to exceed pre-pandemic levels, specifically measured by revenue passenger kilometers (RPK). By 2030, the global RPK is expected to reach 11.4 trillion, which represents 136% of the 2019 volume.
Moreover, the Airports Council International (ACI) World released its 2024 Annual World Airport Traffic Report on September 19 where the council compiled data from over 2,700 airports across more than 180 countries.
The council forecasts a 10% increase in global passenger traffic for 2024, at approximately 9.5 billion. In 2023, passenger traffic hit 8.7 billion, representing a 30.6% increase from 2022 and recovering 95% of pre-pandemic levels.
For 2024, the passenger numbers are expected to exceed 4% of pre-pandemic numbers. Data from the first half of 2024 shows an 11% year-over-year increase in passenger numbers, as international travel increased by 17%. The report projects domestic travel will account for 5.4 billion passengers, while international travel is expected to reach 4.1 billion.
Artificial Intelligence: Transformative Trend In Airline Industry
Using AI in the airline industry marks a significant change toward improving efficiency and customer satisfaction. It shows how technology can make services better while still keeping the important human touch in operations. We discussed this in our article about 11 Worst Aviation Stocks to Buy According to Analysts. Here is an excerpt from the article:
“Like most industries of today, airlines are also implementing AI to improve the efficiency of their operations. According to an August report by CNBC, these companies are using AI for tasks like ground control, customer service, and optimizing flight routes.
American Airlines introduced its AI-powered “smart gating” system at its Dallas-Fort Worth control center. The tool automatically assigns gates to incoming flights, which cut runway taxi time by around 20%, or two minutes per flight, across five airports. The system also helps passengers, baggage, and crews make quicker connections, which improves overall efficiency.
Alaska is using AI to streamline flight paths and optimize aircraft turnaround times at gates. Its tool is described as “Waze for the skies,” and it uses AI to plan faster routes, which saves fuel and reduces delays. Additionally, the system monitors ground operations as it tracks when fuel, catering, and baggage trucks arrive and depart, which allows agents to address delays immediately.
United has implemented generative AI for customer service, especially during flight disruptions. The AI generates detailed, empathetic messages explaining delays, which has increased customer satisfaction by 4% since its rollout on 6,000 flights.”
Moreover, the report by CNBC stated that AI will not be significantly replacing human labor. Instead, it will help humans work more efficiently.
Our Methodology
For this article, we used the Yahoo Finance stocks screener along with ETFs and online rankings to identify over 20 airport or airport related stocks. We narrowed our list to 10 stocks with the lowest average analyst price target, as of September 26. The stocks are listed in descending order of their average price target. We also added hedge fund sentiment around the stocks that trade on the NYSE and NASDAQ, which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Aena S.M.E., S.A. (OTC:ANNSF) One of the Worst Airport Stocks to Buy?
Aena S.M.E., S.A. (OTC:ANNSF)
Number of Hedge Fund Holders: N/A
Average Analyst Price Target Upside: 3.63%
Aena S.M.E., S.A. (OTC:ANNSF) is one of the largest airport operators in the world. It manages a network of 46 airports and two heliports domestically and operates in 33 airports across five countries beyond Spain through its subsidiaries and affiliates.
The company recently updated its Strategic Plan for 2022-2026, according to which it expects over 300 million passengers by 2025, which was priorly projected for 2026. The company has also accelerated its target for achieving zero emissions, now aiming for 2030 instead of 2040, which shows its commitment to sustainability.
In 2023, its airports served 283 million passengers, exceeding pre-pandemic levels, and it projects about 294 million passengers for 2024, with expectations to reach approximately 310 million by the end of the plan period.
In terms of commercial revenue, Aena (OTC:ANNSF) anticipates growth of up to 48% by 2026 compared to 2019, with significant increases in revenue per passenger. Recent tenders for duty-free shops, food and beverage outlets, and retail spaces have led to a 20% increase in Minimum Annual Guaranteed rents in 2023, with expectations of a 46% rise by 2026. Real estate revenues have also surged by over 34% compared to 2019.
According to analyst price target upsides, Aena (OTC:ANNSF) takes the 4th spot on our list of worst airport stocks to buy. Based on coverage by 8 analysts, the company has an average price target of $228.11, which shows an upside of 3.63% on September 26.
Overall, ANNSF ranks 4th on our list of the worst airport stocks to buy. While we acknowledge the potential of ANNSF as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ANNSF but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
