Should Value Investors Buy Delta Air Lines (DAL) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
Delta Air Lines (DAL) is a stock many investors are watching right now. DAL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.59 right now. For comparison, its industry sports an average P/E of 11.68. DAL's Forward P/E has been as high as 17.82 and as low as 6.03, with a median of 7.44, all within the past year.
Investors should also recognize that DAL has a P/B ratio of 3.88. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 4.74. Over the past year, DAL's P/B has been as high as 9.59 and as low as 3.24, with a median of 5.40.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DAL has a P/S ratio of 0.51. This compares to its industry's average P/S of 0.54.
Finally, investors should note that DAL has a P/CF ratio of 13.39. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. DAL's current P/CF looks attractive when compared to its industry's average P/CF of 23.94. Over the past 52 weeks, DAL's P/CF has been as high as 13.56 and as low as 6.91, with a median of 10.02.
Investors could also keep in mind International Consolidated Airlines Group (ICAGY), an Transportation - Airline stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
International Consolidated Airlines Group sports a P/B ratio of 1.09 as well; this compares to its industry's price-to-book ratio of 4.74. In the past 52 weeks, ICAGY's P/B has been as high as 4.70, as low as 1.09, with a median of 1.48.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Delta Air Lines and International Consolidated Airlines Group are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DAL and ICAGY feels like a great value stock at the moment.
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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
International Consolidated Airlines Group SA (ICAGY) : Free Stock Analysis Report
