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Is United Airlines (UAL) Stock Undervalued Right Now?
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.
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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is United Airlines (UAL - Free Report) . UAL is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 8.71 right now. For comparison, its industry sports an average P/E of 16.35. Over the last 12 months, UAL's Forward P/E has been as high as 9.45 and as low as 3.63, with a median of 4.69.
We should also highlight that UAL has a P/B ratio of 2.98. 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 4.87. Over the past year, UAL's P/B has been as high as 2.98 and as low as 1.18, with a median of 1.65.
Value investors will likely look at more than just these metrics, but the above data helps show that United Airlines is likely undervalued currently. And when considering the strength of its earnings outlook, UAL sticks out at as one of the market's strongest value stocks.