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Is United Airlines (UAL) Stock Undervalued Right Now?

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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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is United Airlines (UAL - Free Report) . UAL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 6.85 right now. For comparison, its industry sports an average P/E of 8.40. Over the past 52 weeks, UAL's Forward P/E has been as high as 9.80 and as low as 6.70, with a median of 7.62.

Investors will also notice that UAL has a PEG ratio of 0.31. 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 PEG compares to its industry's average PEG of 0.52. Over the last 12 months, UAL's PEG has been as high as 0.47 and as low as 0.30, with a median of 0.36.

Investors should also recognize that UAL has a P/B ratio of 2.11. 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 2.32. Within the past 52 weeks, UAL's P/B has been as high as 2.78 and as low as 2.03, with a median of 2.29.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.51. This compares to its industry's average P/S of 0.62.

Finally, investors should note that UAL has a P/CF ratio of 4.54. 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. This stock's P/CF looks attractive against its industry's average P/CF of 5.39. Within the past 12 months, UAL's P/CF has been as high as 6.02 and as low as 4.37, with a median of 5.08.

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.


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