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Controladora: Is VLRS a Good Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (VLRS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Controladora has a trailing twelve months PE ratio of 17.95, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.89. While Controladora’s current PE level puts it above its midpoint over the past five years, it stands well below the highs for the stock – indicating that it could be a great entry point.
However, the stock’s PE stands little above the Zacks classified Transportation sector’s trailing twelve months PE ratio, which stands at 16.09. This indicates that the stock is little overvalued right now, compared to its peers.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Controladora has a P/S ratio of about 1.09. This is much lower than the S&P 500 average, which comes in at 3.08 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Controladora currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Controladora a solid choice for value investors.
What About the Stock Overall?
Though Controladora might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade and Momentum score of ‘F’, each. This gives VLRS a Zacks VGM score—or its overarching fundamental grade—of ‘F’. (You can read more about the Zacks Style Scores here >>)
Further, the company’s recent earnings estimates have been quite disappointing as the full year estimate has seen two downward revisions with no upward revisions in the last sixty days. This has caused the estimate to slump 50%, over the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. Price and Consensus
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Nonetheless, Controladora is an inspired choice for value investors, given its impressive lineup of statistics on this front. Despite having a Zacks Rank #3, the stock belongs to an industry which is ranked among the Top 21%, which indicates that broader factors are favorable for the company. Further, over the past one year, the Zacks classified Transportation – Airlines industry’s performance has outdone the broader market, as you can see below:
So, value investors might want for estimates to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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Controladora: Is VLRS a Good Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
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One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (VLRS - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Controladora has a trailing twelve months PE ratio of 17.95, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.89. While Controladora’s current PE level puts it above its midpoint over the past five years, it stands well below the highs for the stock – indicating that it could be a great entry point.
However, the stock’s PE stands little above the Zacks classified Transportation sector’s trailing twelve months PE ratio, which stands at 16.09. This indicates that the stock is little overvalued right now, compared to its peers.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Controladora has a P/S ratio of about 1.09. This is much lower than the S&P 500 average, which comes in at 3.08 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Controladora currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Controladora a solid choice for value investors.
What About the Stock Overall?
Though Controladora might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade and Momentum score of ‘F’, each. This gives VLRS a Zacks VGM score—or its overarching fundamental grade—of ‘F’. (You can read more about the Zacks Style Scores here >>)
Further, the company’s recent earnings estimates have been quite disappointing as the full year estimate has seen two downward revisions with no upward revisions in the last sixty days. This has caused the estimate to slump 50%, over the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. Price and Consensus
Controladora Vuela Compania de Aviacion, S.A.B. de C.V. Price and Consensus | Controladora Vuela Compania de Aviacion, S.A.B. de C.V. Quote
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
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Bottom Line
Nonetheless, Controladora is an inspired choice for value investors, given its impressive lineup of statistics on this front. Despite having a Zacks Rank #3, the stock belongs to an industry which is ranked among the Top 21%, which indicates that broader factors are favorable for the company. Further, over the past one year, the Zacks classified Transportation – Airlines industry’s performance has outdone the broader market, as you can see below:
So, value investors might want for estimates to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>