Is American Airlines (AAL) Stock Undervalued Right Now?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is American Airlines (AAL). AAL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 5.92. This compares to its industry's average Forward P/E of 10.13. Over the past 52 weeks, AAL's Forward P/E has been as high as 8.01 and as low as 4.34, with a median of 5.61.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AAL has a P/S ratio of 0.18. This compares to its industry's average P/S of 0.44.
Finally, we should also recognize that AAL has a P/CF ratio of 3.14. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.05. AAL's P/CF has been as high as 4.96 and as low as 1.83, with a median of 2.33, all within the past year.
Investors could also keep in mind Controladora Vuela Compania de Aviacion, B. de C.V. (VLRS), an Transportation - Airline stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of Controladora Vuela Compania de Aviacion, B. de C.V. currently holds a Forward P/E ratio of 37.19, and its PEG ratio is -2.17. In comparison, its industry sports average P/E and PEG ratios of 10.13 and 0.45.
VLRS's Forward P/E has been as high as 6,243.17 and as low as -73,021.84, with a median of 9.57. During the same time period, its PEG ratio has been as high as 644.96, as low as -7,543.58, with a median of 0.47.
Additionally, Controladora Vuela Compania de Aviacion, B. de C.V. has a P/B ratio of 5.05 while its industry's price-to-book ratio sits at 3.45. For VLRS, this valuation metric has been as high as 8.02, as low as 3.47, with a median of 5.56 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that American Airlines and Controladora Vuela Compania de Aviacion, B. de C.V. are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AAL and VLRS feels like a great value stock at the moment.
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American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (VLRS) : Free Stock Analysis Report
