Value
8.9/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 9.0 |
| EV/EBITDA | 8.4 |
| Fwd P/E | 9.5 |
| PEG | 10.0 |
| Analyst target | 7.5 |
- ▸Forward P/E: 8.3x
- ▸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 score6.2/10
ConfidenceMEDIUM
MacroNEUTRAL
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.
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%. | ↓Deteriorating |
| 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. | ↑Improving |
| 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. | ↓Deteriorating |
| 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. | ↓Deteriorating |
| 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.
↓DeterioratingEarnings
- 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.
↑ImprovingValuation 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.
↓DeterioratingGrowth 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.
↓DeterioratingBear 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.
Per-dimension breakdown
Quality
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 5.5 |
| Gross margin | 1.4 |
| Op margin | 2.1 |
| Net margin | 4.9 |
| Current ratio | 2.7 |
| FCF quality | 6.4 |
| Moat | 6.0 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 108%
Growth
7.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 9.3 |
| EPS growth | 5.6 |
- ▸Strong growth: 27% YoY
Momentum
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 1.1 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+2.9%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.0 |
| Price target | 9.1 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (9.0) — signal dampened
- ▸Analyst upside: 39%
Insider
5.0/10data confidence 50%Peer rank
5.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.4 |
| quality rank | 8.3 |
| growth rank | 7.5 |
- ▸Superior ROE vs peers
Technical
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.8 |
| support resistance | 6.7 |
| 52w position | 4.9 |
| gap | 5.0 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.9 |
| days to cover | 5.7 |
| volatility | 2.5 |
| put call | 10.0 |
| implied vol | 4.5 |
| max pain risk | 7.0 |
| beta | 7.7 |
| debt equity | 0.5 |
Catalyst
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 8.5 |
- ▸Perfect beat streak: 4Q
- ▸Dividend aristocrat: 2.9% yield
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- ASYMMETRY:2.6>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:98d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:1.8<4.5
Warning (0)
none
Reward-to-Risk
2.59
Upside
+20.8%
Downside
8.0%
Sizing output
AVOID
SetupRange Bound — RSI 57 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.8<4.5) reinforce the read. Current asymmetry R:R is 2.59 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.9, Catalyst at 7.7, and Sentiment at 7.6; the weakest are Momentum at 1.8, Insider at 5.0, and Quality at 5.1. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 2.59 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.