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.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is American Airlines (AAL). AAL is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 9.44 right now. For comparison, its industry sports an average P/E of 11.81. Over the past 52 weeks, AAL's Forward P/E has been as high as 11.09 and as low as 4.04, with a median of 7.73.
Finally, investors should note that AAL has a P/CF ratio of 2.92. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. AAL's current P/CF looks attractive when compared to its industry's average P/CF of 6.93. Within the past 12 months, AAL's P/CF has been as high as 4.58 and as low as 2.04, with a median of 3.05.
Investors could also keep in mind Delta Air Lines (DAL), another Transportation - Airline stock with a Zacks Rank of #2 (Buy) and Value grade of A.
Shares of Delta Air Lines are currently trading at a forward earnings multiple of 9.13 and a PEG ratio of 1.61 compared to its industry's P/E and PEG ratios of 11.81 and 0.53, respectively.
DAL's price-to-earnings ratio has been as high as 9.94 and as low as 5.04, with a median of 8.52, while its PEG ratio has been as high as 2.36 and as low as 0.45, with a median of 1.04, all within the past year.
Additionally, Delta Air Lines has a P/B ratio of 2.24 while its industry's price-to-book ratio sits at 3.23. For DAL, this valuation metric has been as high as 3.11, as low as 1.52, with a median of 2.29 over the past year.
These are just a handful of the figures considered in American Airlines and Delta Air Lines'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 DAL is an impressive value stock right now.
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American Airlines Group Inc. (AAL): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).