Monday, June 17, 2019

OMA Delivering Some 'Oh My' On Margins

I thought Grupo Aeroportuario del Centro Norte (OMAB) (or “OMA”) shares looked too cheap back in mid-December as investors rushed to panic about the potential risk to airport concessions/tariffs and air travel volumes in Mexico from the new populist government. Since then, not only has OMA’s traffic held up better than expected (true for Mexico as a whole as well), but OMA has outperformed with respect to growing non-aero revenue and controlling/reducing expenses.

With the 50%+ move in the ADRs, I look at OMA as more of a hold now than an appealing buy. Air traffic is holding up well and there could be more upside in EBITDA and FCF on even better operating leverage, but I’m not inclined to press my luck too far here. A pullback to the mid-$40’s would be a different story, though, and this is a name worth keeping on a watchlist.

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OMA Delivering Some 'Oh My' On Margins

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