Is American Airlines (AAL) a Great Value Stock Right Now?
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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.
American Airlines (AAL) is a stock many investors are watching right now. AAL is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 7.90 right now. For comparison, its industry sports an average P/E of 17.33. Over the past year, AAL's Forward P/E has been as high as 7.90 and as low as 4.01, with a median of 5.92.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.17. This compares to its industry's average P/S of 0.38.
These figures are just a handful of the metrics value investors tend to look at, but they help show that American Airlines is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AAL feels like a great value stock at the moment.
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American Airlines Group Inc. (AAL) : Free Stock Analysis Report