Back to top

Should Value Investors Buy United Continental (UAL) Stock?

Read MoreHide Full Article

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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

United Continental (UAL - Free Report) is a stock many investors are watching right now. UAL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.66. This compares to its industry's average Forward P/E of 8.68. Over the past year, UAL's Forward P/E has been as high as 9.80 and as low as 7.49, with a median of 8.64.

Investors will also notice that UAL has a PEG ratio of 0.38. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. UAL's industry has an average PEG of 0.43 right now. Over the past 52 weeks, UAL's PEG has been as high as 0.47 and as low as 0.34, with a median of 0.43.

We should also highlight that UAL has a P/B ratio of 2.41. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. UAL's current P/B looks attractive when compared to its industry's average P/B of 2.57. Over the past year, UAL's P/B has been as high as 2.85 and as low as 2.16, with a median of 2.39.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. UAL has a P/S ratio of 0.54. This compares to its industry's average P/S of 0.74.

Finally, investors will want to recognize that UAL has a P/CF ratio of 5.63. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. UAL's current P/CF looks attractive when compared to its industry's average P/CF of 6.12. UAL's P/CF has been as high as 6.04 and as low as 4.27, with a median of 5.26, all within the past year.

These are just a handful of the figures considered in United Continental'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 UAL is an impressive value stock right now.




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


United Continental Holdings, Inc. (UAL) - free report >>

More from Zacks Tale of the Tape

You May Like

Published in