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Are Investors Undervaluing Air France (AFLYY) Right Now?

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.

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.

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.

One company to watch right now is Air France (AFLYY). AFLYY is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 4.31. This compares to its industry's average Forward P/E of 9.34. Over the past 52 weeks, AFLYY's Forward P/E has been as high as 7.75 and as low as 3.09, with a median of 4.41.

Investors should also note that AFLYY holds a PEG ratio of 0.45. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AFLYY's industry has an average PEG of 0.77 right now. AFLYY's PEG has been as high as 0.59 and as low as 0.22, with a median of 0.45, all within the past year.

Investors should also recognize that AFLYY has a P/B ratio of 1.46. 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. This stock's P/B looks attractive against its industry's average P/B of 2.50. Within the past 52 weeks, AFLYY's P/B has been as high as 2.16 and as low as 1.12, with a median of 1.44.

Finally, we should also recognize that AFLYY has a P/CF ratio of 1.87. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 5.70. Within the past 12 months, AFLYY's P/CF has been as high as 3.75 and as low as 1.36, with a median of 2.04.

Value investors will likely look at more than just these metrics, but the above data helps show that Air France is likely undervalued currently. And when considering the strength of its earnings outlook, AFLYY sticks out at as one of the market's strongest value stocks.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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