Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Grupo Aeroportuario del Pacifico Are Falling Today

By Lou Whiteman - Updated Mar 9, 2020 at 3:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The coronavirus sell-off ripples into companies that are impacted by flight demand.

What happened

Shares of Grupo Aeroportuario del Pacifico (PAC -0.01%) fell more than 10% on Monday, outpacing the broader market sell-off, on fears that the COVID-19 coronavirus would eat into vacation travel demand and ruin the key spring season for the airport operator.

So what

Grupo Aeroportuario del Pacifico operates 12 airports in Mexico and two in Jamaica, catering to vacation travelers heading to sunny destinations. Until recently, the stock has held up much better than have shares of its airline customers, in part because volumes remained healthy through February.

Planes parked at an airport.

Image source: Getty Images.

The company reported that total terminal passengers at its airports grew by 17% year over year in February.

But as evidence continues to mount that travel demand is cratering as the COVID-19 coronavirus outbreak spreads, the impact seems sure to ripple to airport operators. Last week, United Airlines Holdings cut capacity by at least 10% across its network, and JetBlue Airways is also revising capacity downward. With airline demand falling, it seems unlikely 2020 will have a strong spring break season, a traditionally busy time for Grupo Aeroportuario's airports.

PAC Chart

PAC data by YCharts.

Now what

The situation with airlines is definitely material but does not appear to be permanent. That argument can be made for businesses that support airlines as well. Grupo Aeroportuario seems likely to report depressed traffic volumes during the months to come and could disappoint for the current quarter and beyond.

But this too shall pass, even if it does take time to get the outbreak under control. For those able to ignore the short-term noise and ride out this storm, the case for buying Grupo Aeroportuario remains as viable today as it did prior to the coronavirus-related sell-off.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Grupo Aeroportuario del Pacifico, S.A.B. de C.V. Stock Quote
Grupo Aeroportuario del Pacifico, S.A.B. de C.V.
$146.23 (-0.01%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.