Undervalued CAAP Offers High-Quality Assets & Growth in Air Travel Recovery
Corporación América Airports S.A. (CAAP), a leading global airport operator, has emerged as an attractive international investment opportunity. Despite being undervalued, CAAP boasts high-quality assets, robust cash flow, and multiple growth catalysts.
A bullish thesis on CAAP was recently posted on the Value investing subreddit, highlighting the company's strong fundamentals. CAAP has benefited from a resurgence in air travel, with total passenger traffic surging by 13.7% last quarter. This growth is supported by the company's extensive portfolio of 53 airports, with a significant concentration in South America, particularly Argentina.
Airports, as high-quality assets, offer robust profitability, often exceeding 50% EBITDA margins. CAAP's levered free cash flow stands at a strong $600 million, providing flexibility for reinvestment, acquisitions, or shareholder returns. Additionally, Argentina's pro-business policies under President Javier Milei have further bolstered CAAP's outlook.
As of September 24th, CAAP's share was trading at $19.13, with trailing and forward P/E ratios of 20.35 and 4.89 respectively. The company generates $641 million in LTM EBITDA against an enterprise value of $4.1 billion, implying an attractive EV/EBITDA multiple of 6.4x.
With passenger traffic growth and Argentina's economic recovery, CAAP is poised for annual revenue growth of 15%+ over the next few years. Despite being undervalued, CAAP's compelling investment opportunity is supported by its high-quality assets, strong cash flow, and multiple growth catalysts. Ten hedge funds held CAAP in their portfolios at the end of the second quarter, reflecting the company's appeal to savvy investors.
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