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 Fraport AG (OTC:FPRUF) 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.
Fraport AG (OTC:FPRUF)
Average Price Target Upside Potential According to Analysts: 25.70%
Average Share Price Target Projected by Analysts: $65.33
Fraport AG (OTC:FPRUF) is a leading global airport operator headquartered in Frankfurt, Germany. The company owns and manages Frankfurt Airport, one of the busiest aviation hubs in Europe. Through its portfolio of companies, Fraport AG (OTC:FPRUF) also holds interests in the management and operation of several other airports around the world. The company offers a diverse range of airport services, including flight and terminal operations, ground handling, airport management, parking, security, retail, real estate, and consulting services.
The German group has a presence in several markets, including Brazil, Peru, Bulgaria, Slovenia, Turkey, Greece, China, India, and the United States. However, on September 9, Fraport AG (OTC:FPRUF) signed an agreement to sell its entire 10% stake in Delhi International Airport to its majority owner, GMR Airports Infrastructure Limited, for USD 126 million. This transaction is expected to be completed in the first quarter of 2025, indicating that Fraport may soon exit the Indian market.
The company stands out as a promising investment option due to its notable growth in earnings and impressive financial performance. In the first half of 2024, total revenue rose by 13% year-over-year to reach EUR 2.04 billion, driven by growing demand for air travel. Fraport AG’s (OTC:FPRUF) international business was a key driver of revenue growth, particularly its operations in the United States, Peru, and Greece. The takeover of center management at Washington D.C.’s Dulles and Ronald Reagan airports boosted Fraport USA’s revenue, while Lima and Fraport Greece benefited from strong passenger traffic. The positive performance of these international subsidiaries helped the group deliver strong financial performance in the first half of 2024.
Passenger numbers increased by 7.2% to a total of 74.1 million travelers across Fraport AG’s (OTC:FPRUF) airports in the first half of 2024. The company’s EBITDA reached EUR 567.1 million, reflecting a 17.8% increase, while net profit surged nearly 90% to EUR 160.8 million, showcasing the effectiveness of the company’s operational strategies and investments. As a result, basic earnings per share rose to EUR 1.63 in the first half of 2024, compared to EUR 0.87 in the first half of 2023.
Analysts are also bullish on FPRUF and have a consensus buy rating on the stock and the 12-month median price target of $65.33 set by analysts indicates a potential upside of 25.70% from current levels.
Overall FPRUF ranks 4th among the best airport stocks to buy. While we acknowledge the potential of FPRUF 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 FPRUF 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.