Intrinsic Value Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (PAC)

• Previous Close: $274.91
• Intrinsic Value: $182.89
• Upside potential: -33%

Stock Valuation Context

Business Model And Market Position

Grupo Aeroportuario del Pacífico (GAP) operates a network of 12 airports in Mexico's Pacific and Central regions, including key hubs like Guadalajara and Tijuana. The company generates revenue through aeronautical fees (landing, passenger charges) and non-aeronautical streams (retail, parking, advertising), benefiting from long-term government concessions. As Mexico's second-largest airport operator, GAP holds strategic monopolies in high-traffic tourist and business destinations, leveraging Mexico's growing air travel demand and international connectivity. Its diversified passenger base—combining domestic, U.S., and leisure traffic—insulates it from regional demand shocks. GAP's scale allows cost efficiencies in maintenance and capex, while its premium retail partnerships enhance non-aeronautical margins. The company faces regulatory oversight but maintains pricing flexibility under Mexico's dual-till system, which supports profitability. Competitive threats are limited by high barriers to entry and exclusive concessions, though operational performance remains tied to macroeconomic trends and tourism recovery.

Revenue Profitability And Efficiency

In FY2024, GAP reported revenue of MXN 26.8 billion, with net income of MXN 8.6 billion, reflecting a robust 32.1% net margin. Diluted EPS stood at MXN 175.7, supported by high-margin non-aeronautical revenue (∼40% of total). Operating cash flow of MXN 16.7 billion covered capex (MXN 7.8 billion) comfortably, indicating strong cash conversion. Passenger traffic growth and commercial yield optimization drove profitability.

Earnings Power And Capital Efficiency

GAP's asset-light model generates high returns, with ROIC likely exceeding 15% given its concession-based operations. Aeronautical revenue per passenger remains stable, while commercial revenue per passenger benefits from retail upgrades. Capital efficiency is evident in its low recurring capex needs (∼30% of operating cash flow), with major expansions funded through debt at favorable rates.

Balance Sheet And Financial Health

The company holds MXN 13.5 billion in cash against MXN 48.0 billion total debt, with manageable leverage (net debt/EBITDA ∼2.5x). Debt maturity profiles are staggered, and liquidity is sufficient for concession obligations. Mexican peso-denominated debt mitigates currency risk, though USD-linked aeronautical tariffs provide a natural hedge.

Growth Trends And Dividend Policy

GAP targets mid-single-digit annual passenger growth, aligned with Mexico's GDP and tourism trends. A progressive dividend policy (MXN 7.23 per share in FY2024, ∼40% payout ratio) balances shareholder returns with reinvestment needs. Future growth hinges on capacity expansions (e.g., Guadalajara Terminal 2) and commercial monetization.

Valuation And Market Expectations

Trading at ∼12x EV/EBITDA, GAP's valuation reflects its stable cash flows and concession longevity. The market prices in steady traffic recovery and inflation-linked tariff adjustments, with upside from non-aeronautical outperformance.

Strategic Advantages And Outlook

GAP's monopolistic concessions, pricing power, and exposure to Mexico's structural air travel growth underpin its resilience. Risks include regulatory changes and economic downturns, but its diversified traffic and cost controls position it for sustained outperformance.

Sources

Company 10-K, investor presentations