Value
8.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.0 |
| P/S | 9.6 |
| EV/EBITDA | 8.4 |
| Fwd P/E | 9.5 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 8.2x
- ▸PEG: 0.12
- ▸Attractively valued
LTM · Why this verdict
Why LATAM Airlines Group (LTM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.8/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Four consecutive quarters of positive earnings surprises averaging roughly 35% above consensus — including a 70% beat in the most recent period — demonstrate a consistent and widening pattern of outperformance against market expectations across multiple operating environments. Earnings | The beat streak extends through the next two reported quarters with average positive surprises above 10%. | →Stable |
| CounterAirline earnings are highly sensitive to fuel costs, currency movements, and demand cycles; one-time tailwinds could inflate near-term beats without reflecting durable operating leverage that would sustain the pattern. | ||
At a forward P/E of 8.1x and a PEG of 0.11, the stock screens as deeply attractively valued relative to its earnings growth rate of 22% year over year — offering meaningful room for multiple expansion if the growth trajectory holds. Valuation breakdown | Forward earnings estimates increase over the next two reported periods, keeping the forward P/E below 12x as earnings grow at 15% or more year over year. | →Stable |
| CounterA debt-to-equity ratio of 4.4 constrains the quality of the earnings base and limits the multiple the market will award; the low forward P/E may reflect a leverage discount rather than an overlooked opportunity. | ||
Revenue is growing at 22% year over year, corroborated by rising on-balance volume and a price above the 200-day moving average — broad-based indicators that the market is recognizing and pricing the growth in real time. Growth breakdown | Revenue growth stays above 15% year over year for the next two reported quarters. | →Stable |
| CounterAirlines face volatile demand patterns; a softening in passenger volumes or yield compression from competitive capacity additions could compress revenue growth rapidly from current elevated levels. | ||
A debt-to-equity ratio of 4.4 carries a material penalty to balance-sheet quality, leaving limited financial cushion if cash flows soften and raising the risk of refinancing pressure or covenant constraints in a slower-growth environment. Bear case | Debt-to-equity declines toward 3.0 over the next four quarters as strong cash generation is applied to debt reduction. | →Stable |
| CounterAccelerating earnings at 22% year-over-year growth and a perfect four-quarter beat streak may organically deleverage the balance sheet without requiring external financing, reducing the practical impact of current leverage levels. | ||
Four consecutive quarters of positive earnings surprises averaging roughly 35% above consensus — including a 70% beat in the most recent period — demonstrate a consistent and widening pattern of outperformance against market expectations across multiple operating environments.
→StableEarnings
- Expectation
- The beat streak extends through the next two reported quarters with average positive surprises above 10%.
CounterAirline earnings are highly sensitive to fuel costs, currency movements, and demand cycles; one-time tailwinds could inflate near-term beats without reflecting durable operating leverage that would sustain the pattern.
At a forward P/E of 8.1x and a PEG of 0.11, the stock screens as deeply attractively valued relative to its earnings growth rate of 22% year over year — offering meaningful room for multiple expansion if the growth trajectory holds.
→StableValuation breakdown
- Expectation
- Forward earnings estimates increase over the next two reported periods, keeping the forward P/E below 12x as earnings grow at 15% or more year over year.
CounterA debt-to-equity ratio of 4.4 constrains the quality of the earnings base and limits the multiple the market will award; the low forward P/E may reflect a leverage discount rather than an overlooked opportunity.
Revenue is growing at 22% year over year, corroborated by rising on-balance volume and a price above the 200-day moving average — broad-based indicators that the market is recognizing and pricing the growth in real time.
→StableGrowth breakdown
- Expectation
- Revenue growth stays above 15% year over year for the next two reported quarters.
CounterAirlines face volatile demand patterns; a softening in passenger volumes or yield compression from competitive capacity additions could compress revenue growth rapidly from current elevated levels.
A debt-to-equity ratio of 4.4 carries a material penalty to balance-sheet quality, leaving limited financial cushion if cash flows soften and raising the risk of refinancing pressure or covenant constraints in a slower-growth environment.
→StableBear case
- Expectation
- Debt-to-equity declines toward 3.0 over the next four quarters as strong cash generation is applied to debt reduction.
CounterAccelerating earnings at 22% year-over-year growth and a perfect four-quarter beat streak may organically deleverage the balance sheet without requiring external financing, reducing the practical impact of current leverage levels.
TrendMatrix Research · core thesis
Engine thesis — one sentence
LATAM Airlines is executing with exceptional precision — a perfect four-quarter beat streak averaging roughly 35% above consensus including a 70% positive surprise most recently, against 22% year-over-year earnings growth at a forward P/E of 8.1x — but a debt-to-equity ratio of 4.4 is the primary financial vulnerability if the growth runway shortens.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 6.2 |
| Gross margin | 2.0 |
| Op margin | 8.0 |
| Net margin | 5.6 |
| Current ratio | 2.7 |
| FCF quality | 6.1 |
| Moat | 6.0 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 118%
Growth
9.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 22% YoY
Momentum
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.4 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 2.1 |
- ▸Overbought (RSI 72)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.2 |
| Price target | 8.2 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (10.0) — signal dampened
- ▸Analyst upside: 25%
Insider
5.0/10data confidence 50%Peer rank
6.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.9 |
| quality rank | 8.4 |
| growth rank | 8.8 |
- ▸Superior ROE vs peers
- ▸Industry growth leader
Technical
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.4 |
| support resistance | 2.0 |
| 52w position | 6.0 |
| gap | 6.0 |
Risk (lower is worse)
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.2 |
| days to cover | 7.6 |
| volatility | 3.5 |
| put call | 9.9 |
| implied vol | 3.0 |
| beta | 8.4 |
| debt equity | 0.6 |
- ▸High IV: 62%
Catalyst
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.5 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 271.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.3>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:30d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.6<1.5@spot
Warning (1)
- MOMENTUM:5.3<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
0.61
Upside
+9.1%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 9.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:0.6<1.5@spot) reinforce the read. Current asymmetry R:R is 0.61 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 9.0, Value at 8.7, and Sentiment at 7.3; the weakest are Technical at 4.3, Insider at 5.0, and Momentum at 5.3. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.61 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Attractive Valuation Growth Franchise
Trip ifForward P/E expands above 16x without a commensurate increase in forward earnings estimates.
- P3Strong Revenue Growth Momentum
Trip ifRevenue growth falls below 10% year over year for 2 consecutive reported quarters.
- P4High Leverage Financial Risk
Trip ifNet debt-to-EBITDA exceeds 5x for 2 consecutive periods.