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Should Value Investors Buy Hawaiian Holdings (HA) Stock?

Zacks Equity Research

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Hawaiian Holdings (HA) is a stock many investors are watching right now. HA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.71 right now. For comparison, its industry sports an average P/E of 9.28. Over the last 12 months, HA's Forward P/E has been as high as 8.36 and as low as 4.77, with a median of 7.02.

Another valuation metric that we should highlight is HA's P/B ratio of 1.28. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. HA's current P/B looks attractive when compared to its industry's average P/B of 2.53. Over the past year, HA's P/B has been as high as 2.02 and as low as 1.09, with a median of 1.33.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. HA has a P/S ratio of 0.5. This compares to its industry's average P/S of 0.68.

Finally, our model also underscores that HA has a P/CF ratio of 3.94. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.93. HA's P/CF has been as high as 4.36 and as low as 2.71, with a median of 3.54, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Hawaiian Holdings is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HA feels like a great value stock at the moment.


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