VLRS Stock Trades Lower Than Its Industry at 0.29X P/S:Time to Buy?

Core Viewpoint - Volaris (VLRS) is identified as one of the cheapest stocks in the airline industry, with a strong value score and attractive valuation metrics compared to its peers [1][3]. Financial Performance - In Q3 2024, Volaris reported earnings of 32 cents per share, significantly exceeding the Zacks Consensus Estimate of 19 cents, marking a 197% year-over-year increase [5]. - Total revenues reached $813 million, surpassing the Zacks Consensus Estimate of $795.9 million, driven by increased base fares and ancillary revenues per passenger [5]. - The average economic fuel costs decreased by 16.6% year over year, contributing positively to the bottom line [5]. Capacity and Load Factor - Despite a 14.4% reduction in available seat miles, the load factor was a healthy 87.4%, indicating strong demand [6]. - The airline anticipates a 13% decline in capacity for 2024 compared to 2023, with a significant portion of its fleet expected to remain grounded [7]. Growth Opportunities - Volaris is capitalizing on the opportunity to convert bus passengers into air travelers, viewing the long-distance bus network in Mexico as a growth avenue [8]. - The restoration of Mexico's safety rating by the United States has created opportunities in the transborder market [9]. Expansion Initiatives - Volaris announced a new non-stop service to Zacatecas, increasing its presence at Oakland International Airport to eight destinations, with flights scheduled to operate three times a week [10]. Stock Performance and Market Sentiment - Over the past three months, VLRS shares have outperformed both the industry and U.S. ultra-low-cost carrier Spirit Airlines, with a growth of 41.6% compared to 15.8% for the industry [11][13]. - Technical indicators show VLRS trading above its 50-day and 200-day moving averages, suggesting strong upward momentum and positive market sentiment [17]. Investment Outlook - Given the favorable conditions surrounding VLRS, it is recommended for investors to consider adding the stock to their portfolios for potential healthy returns, supported by a Zacks Rank 1 (Strong Buy) [19].