We recently compiled a list of the 10 Best Airport Stocks To Buy. In this article, we are going to take a look at where Aeroports de Paris SA (OTC:AEOXF) stands against the other airport stocks.
Passenger Traffic Rebound: Airport Industry Poised for Growth
The airport industry plays a crucial role in facilitating global connectivity, enabling the movement of people and goods across borders. The performance of the airport sector can significantly influence economic growth and development worldwide.
Passenger traffic in the global air travel industry is experiencing a strong rebound as it recovers from the impact of COVID-19. According to Airports Council International (ACI), global passenger volume is projected to reach approximately 8.7 billion in 2023, which is 95% of the pre-pandemic levels seen in 2019. This represents a significant year-over-year growth of 31% from 2022 levels. Looking ahead, 2024 is expected to be a landmark year, with passenger numbers predicted to surpass 2019 levels for the first time since COVID-19, reaching around 9.7 billion passengers, or 106% of the 2019 volume. This represents a 12% year-over-year growth from 2023 levels.
The long-term outlook for the airport and air travel industry is also promising, with total passenger traffic expected to grow at a compound annual growth rate (CAGR) of 4.3% from 2023 to 2042. ACI forecasts indicate that by 2042, global passenger traffic could nearly double the 2024 projection, reaching close to 20 billion passengers.
However, factors such as high global inflation, slowdown of global GDP, extreme weather events, and geopolitical conflicts could introduce substantial risks and uncertainties in future forecasts.
Prioritizing Sustainable Growth and Efficiency
As the airport industry expands, sustainability and efficiency have become key focuses. Airports are implementing energy-efficient lighting and exploring the use of sustainable fuels to lessen their environmental impact.
London Heathrow Airport, one of the busiest airports in the world, is among the airports that are committed to sustainability. Since 2017, the airport has been sourcing 100% renewable electricity to power its terminals. As part of its sustainability strategy, the airport aims to cut carbon emissions on the ground by at least 45% by 2030 compared to 2019 levels. This includes enabling passengers to access the airport sustainably, transitioning to zero-carbon vehicles, and investing in efficient infrastructure.
Airports are committed to optimizing operations and enhancing the passenger experience, while also making significant investments in infrastructure upgrades to support future growth.
On August 30, Bloomberg reported that Schiphol Group NV, the owner of Amsterdam Airport, has announced a significant investment of EUR 6 billion ($6.7 billion) over the next five years to upgrade the airport’s infrastructure. This investment is the largest in the airport’s history and it will focus on renewing essential systems such as baggage handling, climate-control systems, escalators, and taxiways. The airport is also seeing a recovery in passenger traffic, with expectations of welcoming between 65 million and 68 million travelers in 2024.
The airport industry remains resilient and focused on delivering a seamless and sustainable travel experience for passengers. With continued investment and innovation, the sector is well-positioned for long-term growth and success. Now that we have discussed some of the key trends in the global airport industry, let’s take a look at the 10 best airport stocks to buy.
Methodology
To compile our list of the best airport stocks to buy, we first consulted stock screeners from Finviz and Yahoo Finance, along with online rankings, to create an initial list of the largest publicly traded airport companies. From this list, we selected the stocks that analysts believe have the most potential for growth. We ranked the best airport stocks to buy based on their average price target upside potential according to analysts, as of September 11, 2024.
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A busy airport terminal full of travelers eager to utilize the company’s services.
Aeroports de Paris SA (OTC:AEOXF)
Average Price Target Upside Potential According to Analysts: 19.83%
Average Share Price Target Projected by Analysts: $155.19
Aeroports de Paris SA (OTC:AEOXF), commonly known as Groupe ADP, is a leading airport operator that manages the full spectrum of airport activities, from engineering and design to operations and infrastructure development. The company owns and operates the three main airports in Paris – Charles de Gaulle, Orly, and Le Bourget – as well as several other aerodromes in the region. Groupe ADP operates a network of 26 airports worldwide through concessions and management contracts. However, through its subsidiaries, activities, and businesses combined, the company is active in over 100 airports across 50 countries.
In addition to its core aviation business, Aeroports de Paris SA (OTC:AEOXF) offers a range of commercial services, including shops, restaurants, hotels, parking, and real estate development, to provide a comprehensive experience for passengers while also generating non-aeronautical revenue.
The company’s diversified revenue model and commitment to sustainable growth make it an attractive investment option for investors seeking exposure to the recovering aviation industry.
Aeroports de Paris SA (OTC:AEOXF) reported strong operating and financial performance in the first half of 2024, with total revenue reaching EUR 2.88 billion, a 13.4% increase compared to the same period last year. Total Groupe ADP passenger traffic increased by 9.7% year-over-year to reach 170.2 million. Groupe ADP benefited from the rise in traffic and robust retail activity, which saw sales per passenger increase to EUR 31.7, up 7.1% compared to the same period last year. The company reported an EBITDA of EUR 943 million, reflecting a 9.3% increase, while net income attributable to the Group surged by 64.5% to EUR 347 million. The company’s operating income from ordinary activities surged by 51.7% to EUR 681 million in the first half of 2024.
On top of this, Groupe ADP made extensive preparations for the Paris 2024 Olympic and Paralympic Games, positioning itself to benefit significantly from the event. The preparations included the opening of a new Metro Line 14 station at Paris-Orly Airport on June 24th, reducing travel time to the city center to just 20 minutes. To accommodate increased passenger traffic at Paris-Charles de Gaulle Airport, the company reopened Terminal 2C and Terminal 2A, achieving full operational capacity at CDG for the first time since 2018. In order to provide the best experience for all travelers, faster security scanners were introduced at the airports in Paris.
During the Olympic Games, Aeroports de Paris SA (OTC:AEOXF) successfully managed a significant volume of luggage and passenger traffic, which is expected to positively impact its upcoming earnings and financial performance report.
Analysts are also bullish on AEOXF. 6 analysts have a buy rating on the stock. The median 12-month stock price target set by analysts for AEOXF is $155.19, which indicates a potential upside of 19.83% from current levels.
Overall AEOXF ranks 6th among the best airport stocks to buy. While we acknowledge the potential of AEOXF 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 time frame. If you are looking for an AI stock that is more promising than AEOXF 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.