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 Japan Airport Terminal Co. Ltd. (OTC:JAIRF) 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.
At Insider Monkey we are obsessed with 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).
A commercial airliner being outfitted with pylons and struts, ensuring a safe flight.
Japan Airport Terminal Co. Ltd. (OTC:JAIRF)
Average Price Target Upside Potential According to Analysts: 35.36%
Average Share Price Target Projected by Analysts: $47.73
Japan Airport Terminal Co. Ltd. (OTC:JAIRF) is a Japanese airport operations company that is primarily focused on the construction, management, and operation of passenger terminals at Tokyo-Haneda International Airport. The company’s business includes facility maintenance and management, leasing commercial spaces to airlines and retailers, merchandise sales at domestic and international terminals, passenger services, and commissioned activities such as duty-free shop operation. Japan Airport Terminal Co. Ltd. (OTC:JAIRF) also has a presence at other major Japanese airports like Narita International Airport, Kansai International Airport and Central Japan International Airport, where it provides wholesale services and operates duty-free shops and retail stores. Additionally, the company operates retail stores at Chengdu Shuangliu International Airport in China.
JAIRF is well-positioned to benefit from the recovery in air travel as global tourism continues to rebound. In the fiscal year 2023, ending on March 31, 2024, Japan Airport Terminal Co. Ltd. (OTC:JAIRF) reported that domestic flight passenger numbers rebounded to about 90% of pre-COVID19 levels, driven by an increase in travel demand. Meanwhile, international flight passengers exceeded pre-pandemic figures, reaching an all-time high thanks to strong inbound demand.
The consolidated results for the fiscal year ending March 31, 2024, show that Japan Airport Terminal Co. Ltd. (OTC:JAIRF) experienced growth in all business segments, including facilities management, merchandise sales, and food and beverage. Operating revenue surged by 92% compared to the previous fiscal year, reaching JPY 217.5 billion. The growth was mainly led by strong performances in facilities management and merchandise sales, which grew by 45% and 169% respectively compared to the previous fiscal year.
Japan Airport Terminal Co. Ltd. (OTC:JAIRF) exceeded its sales and income forecasts and the company achieved record highs in both operating income and ordinary income. In response to this positive performance, JAIRF increased its year-end dividend by JPY 12 from the forecast made in October 2023. The company also added a commemorative dividend of JPY 5 per share to celebrate its 70th anniversary, resulting in a dividend of JPY 42 per share. This will result in an annual dividend of JPY 67 per share and a payout ratio of 32%.
Analysts have a positive outlook on JAIRF, with price targets indicating potential upside, reflecting confidence in the company’s ability to maintain profitability. The median 1-year stock price target set by analysts is $47.73, which indicates a potential upside of 35.36% from current levels.
Overall JAIRF ranks 2nd among the best airport stocks to buy. While we acknowledge the potential of JAIRF 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 JAIRF 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.