Corporacion America Airports is a Compelling Investment Opportunity

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Written By Nathan Goldstein

Corporacion America Airports operates 52 airports across six countries, with a significant concentration in Latin America, particularly Argentina, where it manages 33 airports.

Additionally, the company has operations in Brazil, Uruguay, Ecuador, Italy, and Armenia. In 2023, Corporacion America Airports served 81.1 million passengers, generating $1.4 billion in sales and $677.7 million in EBITDA, reflecting an EBITDA margin of 48.8%.

While these numbers may seem substantial, it’s important to note that a single airport like Schiphol Airport processed 61.7 million passengers in 2023, highlighting that Corporacion America Airports predominantly manages smaller to medium-sized airports.

Financial Performance

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A high-level review of the company’s financial results reveals a positive trajectory. In 2023, company revenues increased by 13.4% to $433 million, and gross profit surged by 21.7% to $165.6 million, benefiting from favorable service cost absorption.

Operating income grew by 22.4% to $124.8 million, resulting in an improved operating margin of 28.8%, up from 26.7% the previous year. This margin expansion was driven by the efficient translation of revenue growth into gross profit, partially offset by higher operating expenses.

Regional Performance

  • Argentina: Passenger traffic increased by 5.3%, with international traffic growing by 16% despite a flat domestic market. While Argentina’s economic situation poses risks, it is notable that international traffic, which constitutes 35% of total traffic, accounts for 90% of passenger use fees, providing a more stable revenue base.
  • Italy: Passenger traffic experienced a robust growth of 14%.
  • Uruguay: Traffic surged by 29%.
  • Armenia: Traffic remained flat.
  • Ecuador and Brazil: Traffic was impacted negatively, with Ecuador experiencing market exits by airlines and Brazil facing challenges from rising ticket prices and aircraft availability.

Overall, while the company demonstrates strong results, it is not a uniform growth story across all regions.

Valuation Analysis

The valuation of Corporacion America Airports presents an interesting case. Despite only a 3% upside against FY2024 earnings, which typically wouldn’t justify a good investment opportunity, the company is independently rated as a strong buy.

This rating is based on the significant upside potential projected for 2025 and 2026 when comparing the company’s valuation against its median EV/EBITDA.

Furthermore, the company’s median EV/EBITDA is significantly lower than that of its peers, suggesting potential for share price growth driven by multiple expansion.

Conclusion: A Compelling Investment Opportunity

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Corporacion America Airports offers a compelling valuation case, appearing undervalued based on EV/EBITDA multiples, which provides opportunities for share price appreciation through multiple expansion.

However, concerns about Argentina’s economic situation present a potential risk to the stock price. Despite Argentina’s long-standing economic challenges, the company’s revenue is heavily influenced by international traffic, which is less susceptible to domestic economic issues.

Moreover, Argentina might attract foreign tourists due to its lower costs, potentially driving traffic.

While there are risks associated with Argentina’s economy, the growth potential in other regions and the possibility for multiple expansions make Corporacion America Airports an attractive investment.

Therefore, the stock is an interesting investment prospect that balances the potential opportunities against the inherent risks.


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