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Is Canadian more volatile than Mesa Air Group (USA Stocks:MESA)?

March 17, 2024  By Vlad Skutelnik
Macroaxis Story
By comparing basic indicators between Mesa Air and Canadian, we can assess the impact of market volatility on both companies' prices and determine if they can mitigate market risk when combined in a portfolio. Pair trading strategies can also be employed, matching a long position in Canadian with a short position in Mesa Air. Refer to our pair correlation module for more details. Let's examine the assets. The asset utilization indicator measures the revenue generated for every dollar of assets a company reports. Mesa Air's asset utilization ratio stands at 55.43 percent, indicating that the company earns $0.55 for each dollar of assets. A rising asset utilization suggests that Mesa Air Group is becoming more efficient in using its assets for daily operations.

Important Takeaways

Despite the volatility of Mesa Air Group (USA Stocks: MESA) with a 200 Day MA of 1.269 and a 52 Week High of 2.69, it presents a compelling investment opportunity when compared to Canadian stocks. However, potential investors should be cautious of the company's financial health, as it reported an operating income loss of 84.3M and a negative profit margin of 0.24.
Published over six months ago
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In the world of investment, volatility often presents an opportunity for high returns, albeit with increased risk. When comparing the investment opportunities between Mesa Air Group (USA Stocks: MESA) and Canadian stocks, it's crucial to consider the volatility factor. With a Beta of 2.981, Mesa Air Group, a key player in the industrials sector and specifically in the airlines industry, exhibits high volatility compared to the market. Mesa Air Group, with a market capitalization of $32.4 million, operates within the domestic passenger airlines service category. Despite the company's high volatility, it's worth noting that it is grappling with significant financial challenges. It recorded a net loss of $120.1 million and an income before tax loss of $128.9 million. Furthermore, the company's current ratio of 0.40X indicates a potential liquidity issue, as it may struggle to meet its short-term obligations with its current assets. However, Mesa Air Group's enterprise value of $540.4 million and total assets worth $898.47 million suggest some underlying value. The company's debt to equity ratio stands at a manageable 1.59%, and it has a workforce of 2.3K employees. In conclusion, while Mesa Air Group presents a potentially lucrative investment opportunity due to its high volatility, it's essential to consider its current financial health. Investors must weigh these factors against the opportunities and risks presented by Canadian stocks before making a decision. Canadian Pacific's share price appears poised for a correction, having risen by 0.08% today, compared to Mesa Air's 4.82%. While some millennials may be indifferent towards the passenger airlines sector, it's worth examining the relative strength of Mesa Air's fundamentals against Canadian Pacific's. We will delve into the competitive aspects of both companies.
Investment perspective, in general, refers to a viewpoint or opinion regarding investment opportunity in Mesa Air. It encompasses the assessment of an investment's potential risks and rewards, and expectations for its performance over time. Several factors influence the investment perspective on Mesa Air, including investment goals, risk tolerance, time horizon, market conditions, and research and analysis. Investors have varying goals, such as capital preservation, income generation, or long-term growth. Risk tolerance plays a significant role in shaping an investor's perspective, with some being more risk-averse and others willing to take on higher risks for potential returns.

Watch out for price decline

Please consider monitoring Mesa Air on a daily basis if you are holding a position in it. Mesa Air is trading at a penny-stock level, and the possibility of delisting is much higher compared to other stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Mesa Air stock to be traded above the $1 level to remain listed. If Mesa Air stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.

How important is Mesa Air's Liquidity

Mesa Air financial leverage refers to using borrowed capital as a funding source to finance Mesa Air Group ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Mesa Air financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Mesa Air's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Mesa Air's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Mesa Air's total debt and its cash.

How does Mesa utilize its cash?

At present, Mesa Air's Change To Inventory is projected to decrease significantly based on the last few years of reporting. . To perform a cash flow analysis of Mesa Air, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Mesa Air is receiving and how much cash it distributes out in a given period. The Mesa Air cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

Mesa Air Gross Profit

Mesa Air Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Mesa Air previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Mesa Air Gross Profit growth over the last 10 years. Please check Mesa Air's gross profit and other fundamental indicators for more details.

Another Deeper Perspective

Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include products or services discounts, promotions, as well as early payments on invoices or services rendered in advance.

Revenue Breakdown

Let me now go over Mesa Air revenue. Based on the latest financial disclosure, Mesa Air Group reported 498.06 M of revenue. This is 85.76% lower than that of the Passenger Airlines sector and 96.77% lower than that of the Industrials industry.
The revenue for all United States stocks is 94.72% higher than that of Mesa Air. As for Canadian Pacific we see revenue of 12.55 B, which is 18.62% lower than that of the Industrials
Sector
3.5 B		CP
12.6 B
MESA498.06 Million3.01
Sector3.5 Billion21.14
CP12.55 Billion75.85
"High risk often equals high reward" - a saying that seems to perfectly capture the investment landscape when comparing Mesa Air Group (MESA) with Canadian stocks. Mesa Air Group, a player in the Airlines industry, exhibits a high Beta of 2.98, indicating a higher volatility compared to the market. This, coupled with a significant Kurtosis of 16.52, suggests that MESA's returns could drastically deviate from the normal distribution, presenting potential for substantial gains. However, the company's financial health raises concerns, with a Probability of Bankruptcy at 52.03% and a negative Net Income of $120.1M, signaling potential losses. Therefore, while MESA offers a high-risk, high-reward scenario, investors must tread carefully, balancing the potential for outsized returns against the risk of significant losses. .

Will Mesa Air continue to go out of control?

Mesa Air Group's risk-adjusted performance is currently at 0.0, indicating low volatility and suggesting that the stock's returns may not be compensating for its risk level. This could concern investors seeking growth and stability. Therefore, it's unclear if Mesa Air can sustain its financial trajectory. Investors should monitor the company's performance and risk management strategies to assess potential return on investment. As of March 17, 2024, Mesa Air reports a Mean Deviation of 4.9, risk-adjusted performance of 0, and Standard Deviation of 8.76. The technical analysis model allows examination of Mesa Air's existing technical drivers and their interrelationships. This information can help determine if the firm will mirror its past price model or if prices will revert.
It's crucial to verify Mesa Air's coefficient of variation and the relationship between the information ratio and kurtosis to assess if the stock is priced accurately at its current price of 0.79 per share. As Mesa Air is a penny stock, it's also recommended to check its Jensen Alpha numbers. In conclusion, the financial health of Mesa Air Group (MESA) is a significant factor to consider for potential investors. With a valuation market value of 0.79 and a real value of 1.07, it is clear that the company's current valuation is below its intrinsic value. However, the analyst overall consensus leans towards a 'Strong Sell', with the highest estimated target price at 2.22 and the lowest at 1.82. This suggests a potential upside, but also a considerable risk. Therefore, while Mesa Air Group may have the resources to sustain growth, the investment decision should be made with caution, taking into account the company's financial position and market sentiment. .

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Editorial Staff

Vlad Skutelnik is a Macroaxis Contributor. Vlad covers stocks, funds, cryptocurrencies, and ETFs that are traded in North America, focusing primarily on fundamentals, valuation and market volatility. He has many years of experience in fintech, predictive investment analytics, and risk management. View Profile
This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Mesa Air Group. Please refer to our Terms of Use for any information regarding our disclosure principles.

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