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Should Value Investors Buy Air France (AFLYY) Stock?

Zacks Equity Research
BRP Inc. (DOOO) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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) and an A for Value. The stock is trading with a P/E ratio of 5.56, which compares to its industry's average of 8.98. 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 4.39.

We also note that AFLYY holds a PEG ratio of 0.45. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AFLYY's industry has an average PEG of 0.51 right now. Within the past year, AFLYY's PEG has been as high as 0.59 and as low as 0.23, with a median of 0.49.

Another notable valuation metric for AFLYY is its 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. This company's current P/B looks solid when compared to its industry's average P/B of 2.65. Over the past year, AFLYY's P/B has been as high as 1.69 and as low as 1.02, with a median of 1.29.

Finally, we should also recognize that AFLYY has a P/CF ratio of 1.90. 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. AFLYY's current P/CF looks attractive when compared to its industry's average P/CF of 6.01. Over the past 52 weeks, AFLYY's P/CF has been as high as 2.94 and as low as 1.51, with a median of 1.91.

These are only a few of the key metrics included in Air France's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AFLYY looks like an impressive value stock at the moment.


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