PAC: A Steady Anchor in Mexico's Travel Boom

As Mexico's tourism sector rebounds post-pandemic, Grupo Aeroportuario del Pacífico (PAC) stands out as a prime infrastructure play. The company's portfolio of 14 airports—12 in Mexico and 2 Jamaica—positions it to capitalize on secular growth in air travel while maintaining pricing power through long-term concessions. Despite near-term macroeconomic headwinds, PAC's resilient financials, undervalued multiple, and strategic expansion make it a compelling buy for investors with a 12–18 month horizon.

Resilient Financials Amid Growth

PAC's first-quarter 2025 results underscore its financial strength. Revenue surged 30.1% year-over-year to Ps. 11,055.2 million, while EBITDA rose 21.1% to Ps. 5,628.8 million. Though the EBITDA margin dipped slightly to 67.1% (excluding IFRIC-12 effects), it remains robust, reflecting the company's cost discipline. Passenger traffic increased 4.2% in Q1, driven by domestic routes, with international traffic recovering unevenly—particularly at Montego Bay and Puerto Vallarta.

The company's cash position of Ps. 16,227.8 million as of March 2025 provides a liquidity cushion, while its debt-to-EBITDA ratio of 1.7x and interest coverage ratio of 5.3x signal manageable leverage. Even as PAC refinanced Ps. 100 million in debt during Q1, its financial flexibility remains intact.

Pricing Power Through Concessions

PAC's real advantage lies in its regulated concessions, which allow it to raise tariffs in line with inflation and demand. A June 6, 2025, announcement highlighted the approval of maximum tariffs and a capital development program for Jamaica's Montego Bay and Kingston airports, underscoring its ability to secure rate hikes. These concessions also shield PAC from volatility, as airport operators typically enjoy stable cash flows under long-term agreements.

Undervalued at 15x EV/EBITDA
Despite its strong performance, PAC trades at an attractive 15x EV/EBITDA multiple (based on 2025E EBITDA of Ps. 22,500 million and an enterprise value of ~Ps. 338 billion). This is a discount to its five-year average of ~18x and peers like Aeropuertos y Servicios Auxiliares (ASUR) at 16.5x. The disconnect likely reflects short-term concerns about macroeconomic pressures, such as currency volatility and inflation, but ignores PAC's structural growth drivers.

Secular Tailwinds and Strategic Expansion

PAC's long-term growth is underpinned by Mexico's tourism boom. Visitor arrivals hit a record 45.5 million in 2024, with demand for leisure travel to coastal destinations like Puerto Vallarta and Mazatlán surging. The company is also expanding its footprint in Jamaica, where passenger traffic rose 9.1% in April 2025, signaling untapped potential.

Moreover, PAC's capital expenditure plans—funded partly by its strong free cash flow—ensure it can modernize infrastructure, boosting operational efficiency and passenger satisfaction. A 28.77% annual return in 2025 (as of June) reflects investor confidence in these initiatives.

Navigating Near-Term Risks

No investment is without risk. PAC's performance hinges on tourism trends and regulatory approvals. A slowdown in Mexican or Caribbean travel, or delays in tariff hikes, could pressure margins. However, the company's diversified portfolio—spanning both domestic and international routes—mitigates geographic concentration risks.

Investment Thesis

PAC's combination of regulated cash flows, pricing power, and undervalued multiple makes it a standout infrastructure stock. With a 15x EV/EBITDA multiple and a track record of outperforming during recovery cycles, the stock offers asymmetric upside. Shares hit an all-time high of Ps. 238.95 in early June but remain below their 52-week high of Ps. 241.62, suggesting further room to rally.

Historical performance data reinforces this thesis: a strategy of buying PAC on the announcement date of quarterly earnings releases and holding for 20 trading days since 2020 has delivered a compound annual growth rate (CAGR) of 20.03%, with an overall return of 164.26%. While this approach carried risks—such as a maximum drawdown of 39.39%—it has historically outperformed broader market movements, aligning with PAC's resilience during recovery cycles.

Recommendation: Buy PAC with a 12–18 month horizon. The stock's undervaluation, robust financials, and secular growth drivers make it a rare blend of stability and upside in today's volatile markets.

Risks: Currency fluctuations, regulatory delays, macroeconomic slowdowns in Mexico or the Caribbean.
Catalysts: Tariff approvals, passenger traffic growth, debt refinancing progress.