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Should Value Investors Buy American Airlines (AAL) Stock?
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
American Airlines (AAL - Free Report) is a stock many investors are watching right now. AAL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 7.05, while its industry has an average P/E of 9.91. Over the past 52 weeks, AAL's Forward P/E has been as high as 8.60 and as low as 4.34, with a median of 5.61.
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. AAL has a P/S ratio of 0.19. This compares to its industry's average P/S of 0.4.
Finally, we should also recognize that AAL has a P/CF ratio of 2.57. 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. AAL's current P/CF looks attractive when compared to its industry's average P/CF of 5.64. Over the past 52 weeks, AAL's P/CF has been as high as 5.04 and as low as 1.83, with a median of 2.32.
Another great Transportation - Airline stock you could consider is Air Canada (ACDVF - Free Report) , which is a # 1 (Strong Buy) stock with a Value Score of A.
Air Canada is currently trading with a Forward P/E ratio of 4.16 while its PEG ratio sits at 0.20. Both of the company's metrics compare favorably to its industry's average P/E of 9.91 and average PEG ratio of 0.49.
ACDVF's Forward P/E has been as high as 19.41 and as low as 3.88, with a median of 11.03. During the same time period, its PEG ratio has been as high as 0.21, as low as 0.20, with a median of 0.20.
Air Canada sports a P/B ratio of 12.23 as well; this compares to its industry's price-to-book ratio of 3.45. In the past 52 weeks, ACDVF's P/B has been as high as 12.85, as low as -16.23, with a median of -4.53.
These are just a handful of the figures considered in American Airlines and Air Canada's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AAL and ACDVF is an impressive value stock right now.
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Should Value Investors Buy American Airlines (AAL) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
American Airlines (AAL - Free Report) is a stock many investors are watching right now. AAL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 7.05, while its industry has an average P/E of 9.91. Over the past 52 weeks, AAL's Forward P/E has been as high as 8.60 and as low as 4.34, with a median of 5.61.
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. AAL has a P/S ratio of 0.19. This compares to its industry's average P/S of 0.4.
Finally, we should also recognize that AAL has a P/CF ratio of 2.57. 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. AAL's current P/CF looks attractive when compared to its industry's average P/CF of 5.64. Over the past 52 weeks, AAL's P/CF has been as high as 5.04 and as low as 1.83, with a median of 2.32.
Another great Transportation - Airline stock you could consider is Air Canada (ACDVF - Free Report) , which is a # 1 (Strong Buy) stock with a Value Score of A.
Air Canada is currently trading with a Forward P/E ratio of 4.16 while its PEG ratio sits at 0.20. Both of the company's metrics compare favorably to its industry's average P/E of 9.91 and average PEG ratio of 0.49.
ACDVF's Forward P/E has been as high as 19.41 and as low as 3.88, with a median of 11.03. During the same time period, its PEG ratio has been as high as 0.21, as low as 0.20, with a median of 0.20.
Air Canada sports a P/B ratio of 12.23 as well; this compares to its industry's price-to-book ratio of 3.45. In the past 52 weeks, ACDVF's P/B has been as high as 12.85, as low as -16.23, with a median of -4.53.
These are just a handful of the figures considered in American Airlines and Air Canada's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AAL and ACDVF is an impressive value stock right now.