Corporación América Airports Reports Strong Q2 Amidst Persistent Valuation Discrepancy
## Corporación América Airports Reports Robust Q2 Performance
**Corporación América Airports S.A.** (NYSE: **CAAP**) concluded the second quarter of 2025 with strong financial and operational performance, marked by substantial revenue and **Adjusted EBITDA** growth, and record passenger traffic. Despite these indicators of underlying strength and a robust balance sheet, the company's valuation continues to reflect a significant discount relative to its peers.
## Detailed Q2 2025 Financial and Operational Metrics
**CAAP** delivered a strong second quarter, with consolidated revenues ex-IFRIC12 reaching **$435.2 million**, an increase of **18.9%** year-over-year (YoY). This growth was propelled by a **22.0%** rise in Commercial revenues and a **15.1%** increase in Aeronautical revenues. Excluding the impact of IFRS rule IAS 29 for hyperinflationary accounting, consolidated revenues ex-IFRIC12 advanced **20.7%** YoY to **$438.5 million**.
Operating Income for the quarter stood at **$117.3 million**, an increase from **$92.9 million** in the second quarter of 2024. Adjusted EBITDA ex-IFRIC12 saw a **23.3%** increase, reaching **$167.9 million** from **$136.2 million** in the prior-year period. Excluding the impact of IAS 29, Adjusted EBITDA ex-IFRIC12 grew **25.2%** to **$168.5 million**. The Adjusted EBITDA margin ex-IFRIC12 expanded by **1.4 percentage points** to **38.6%** from **37.2%** in 2Q24.
Operational metrics also demonstrated robust recovery and growth. Passenger traffic increased by **13.7%** to **20.7 million**, cargo volume saw a **2.2%** increase to **97.2 thousand tons**, and aircraft movements rose **10.2%** to **214.4 thousand**.
The company maintains a strong liquidity position, with Cash & Cash equivalents of **$496.8 million** as of June 30, 2025, and total liquidity reaching **$595 million**, a **13%** increase from year-end 2024. **CAAP** also boasts a low net debt to LTM Adjusted EBITDA ratio of **1.0x**, with total debt at **$1.1 billion** and net debt at **$643 million**. All operating subsidiaries, with the exception of Ecuador, remained cash flow positive.
**Martín Eurnekian**, CEO of Corporación América Airports, commented on the results:
> "We delivered a strong second quarter, with broad-based traffic growth, double-digit increases in revenue and Adjusted EBITDA, and meaningful EBITDA margin expansion, reflecting the strength of our diversified portfolio and disciplined execution."
## Market Valuation Disparity and the Argentina Risk Premium
Despite the clear operational and financial strengths, **Corporación América Airports** continues to trade at a significant discount. The company's **EV/EBITDA FWD** stands at **5.5x**, which is over **50% below industry averages**. This persistent undervaluation is largely attributed to what market participants perceive as an "excessive Argentina risk premium." This premium, analysts suggest, overlooks **CAAP**'s extensive global footprint, which spans **52 airports across six countries**.
While **CAAP** has diversified significantly beyond its Argentine origins, the market's perception of risk remains heavily influenced by the economic narrative of Argentina. Recent developments, however, suggest a shift in this narrative. Argentina's economic landscape in 2025 has moved towards cautious optimism, driven by President **Javier Milei's** radical reforms. **Moody's** upgraded Argentina's long-term foreign currency rating to **Caa1** in July 2025, citing "decisive fiscal adjustments" and a return to growth, while **S&P Global** reaffirmed its **CCC** rating with a stable outlook, acknowledging Milei's "zero deficit" policies. Furthermore, the **U.S. Treasury's** pledge to stabilize Argentina's currency and a **$20 billion IMF loan** in April 2025 have bolstered confidence, contributing to a **5.8% GDP growth** in Q1 2025 and inflation dropping to **1.5%** in May.
Despite these positive indicators, Argentina's sovereign debt still carries an **867-basis-point risk premium**, significantly higher than Brazil's **500-basis-point** or Mexico's **200-basis-point** spreads. This gap, while reflecting past volatility, continues to influence the valuation of companies perceived to have significant exposure to the country, leading to **CAAP**'s stock being quoted at discounts of **40% to 60%** compared to its peers.
## Broader Context: Global Diversification and Operational Strength
**CAAP**'s diversified portfolio across multiple geographies is a critical aspect of its investment thesis, providing a natural hedge against localized economic fluctuations. The consistent cash flow generation from its subsidiaries, with almost all remaining cash flow positive, underscores the operational resilience and financial discipline of the company. The robust balance sheet, characterized by substantial cash reserves and a low net debt ratio, positions **CAAP** favorably to pursue long-term investment plans and potential new concessions without experiencing undue financial strain. This structural capacity for cash generation and growth prospects, analysts argue, is not adequately reflected in the current market valuation.
## Expert Analysis on Mispricing Opportunity
Market observers have consistently highlighted the discrepancy between **CAAP**'s fundamental performance and its stock valuation. An analyst noted that **CAAP** has "ceased to be a simple emerging bet to become a global, profitable and diversified airport platform." The strong Q2 2025 results have further fortified this perspective, with the analyst stating that "the fundamentals have been consolidated, but the market still does not recognize them in the valuation." This view suggests a potential mispricing opportunity for investors willing to adopt a medium- to long-term investment horizon.
## Outlook and Key Factors for Investors
Looking ahead, key factors for investors will include the market's evolving assessment of the "Argentina risk premium" as the country's economic reforms mature and international financial support solidifies. Sustained operational excellence and disciplined execution across **CAAP**'s globally diversified portfolio will be paramount in demonstrating its intrinsic value and distinguishing it from a purely Argentine-centric investment. Any further credit rating improvements for Argentina or a prolonged period of economic stability could serve as catalysts for a re-rating of assets with perceived Argentine exposure, potentially contributing to the closure of **CAAP**'s valuation gap. Investors are advised to monitor forthcoming economic reports and policy developments in Argentina, alongside **CAAP**'s future earnings reports, for further indications of sustained global growth and profitability.
