Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Airlines industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Airlines Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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4 Undervalued Airlines Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Airlines industry for Monday, April 29, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Airlines industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

American Airlines Group Inc’s Value Grade

Value Grade:

American Airlines Group Inc. is a holding company. Its primary business activity is the operation of a network air carrier. The Company, together with its regional airline subsidiaries and third-party regional carriers, operates under the American Eagle brand, providing scheduled air transportation for passengers and cargo through its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo. Its cargo division provides a range of freight and mail services, with facilities and interline connections available across the globe. Its subsidiaries include American Airlines, Inc., Envoy Aviation Group Inc., PSA Airlines, Inc. and Piedmont Airlines, Inc. It operates approximately 965 mainline aircraft supported by its regional airline subsidiaries and third-party regional carriers, which together operated an additional 556 regional aircraft.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

American Airlines Group Inc has a Value Score of 69, which is considered to be undervalued.

When you look at American Airlines Group Inc’s price-to-sales ratio at 0.17 compared to the industry median at 0.36, this company has a lower price relative to revenue compared to its peers. This could make American Airlines Group Inc’s stock more attractive for value investors.

American Airlines Group Inc’s price-earnings ratio is 22.67 compared to the industry median at 13.86. This means it has a higher share price relative to earnings compared to its peers. This could make American Airlines Group Inc less attractive for value investors.

Now, let’s assess American Airlines Group Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 7.1, when compared to the industry median of 6.7, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. American Airlines Group Inc’s shareholder yield is lower than its industry median ratio of 0.31%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

ANA Holdings Inc - ADR’s Value Grade

Value Grade:

ANA Holdings Inc is a Japan-based holding company principally engaged in the aviation business. The Company operates through four business segments. The Aviation segment conducts regular and irregular air transportation of passengers and cargo domestic and international flights. The Aviation-related segment provides services associated with air transportation such as airport handling and maintenance, and various services at the airport to customers and provide reservation information services by telephone. The Travel segment is engaged in the development and sale of packaged travel products, mainly made from airline tickets and accommodation. The Trading Companies segment mainly engaged in the import and export of aviation-related materials and mail orders. It is also engaged in the building management and temporary staffing business.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

ANA Holdings Inc - ADR has a Value Score of 80, which is considered to be undervalued.

ANA Holdings Inc - ADR’s price-earnings ratio is 9.0 compared to the industry median at 13.9. This means that it has a lower price relative to its earnings compared to its peers. This makes ANA Holdings Inc - ADR more attractive for value investors.

ANA Holdings Inc - ADR’s price-to-book ratio is lower than its peers. This could make ANA Holdings Inc - ADR fairly attractive for value investors when compared to the industry median at 1.43.

You can read more about ANA Holdings Inc - ADR’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Flyexclusive Inc’s Value Grade

Value Grade:

Flyexclusive Inc. is a vertically integrated operator of private jet experiences offering customers charter, jet club, and fractional jet services to destinations across the globe. The Company is the owner and operators of Cessna Citation aircraft with a floating fleet of over 100 light to heavy jets, it offer access to a network of personalized private aviation with on-demand flights that can service a specialized trip needs. It provides in-house maintenance, repair and overhaul services, including paint, interiors, and avionics capabilities. The Company's aircraft include Citation Encore, Citation CJ3, Citation CJ3+, Citation Excel/XLS, Citation Sovereign, Citation X, and Gulfstream GIV-SP. It also owns and operates 135 private jets. Additionally, it delivers enhancements to its jet club and grew memberships.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Flyexclusive Inc has a Value Score of 61, which is considered to be undervalued.

Flyexclusive Inc’s price-earnings ratio is 36.3 compared to the industry median at 13.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Flyexclusive Inc less attractive for value investors.

Flyexclusive Inc’s price-to-book ratio is lower than its peers. This could make Flyexclusive Inc more attractive for value investors when compared to the industry median at 1.43.

You can read more about Flyexclusive Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

JetBlue Airways Corporation’s Value Grade

Value Grade:

JetBlue Airways Corporation provides air transportation services across the United States, the Caribbean, Latin America, Canada, and Europe. The Company's segments include Domestic & Canada, Caribbean & Latin America and Atlantic. It operates five types of aircraft: Airbus A220, Airbus A320, Airbus A321, Airbus A321neo, and Embraer E190. It offers an inflight entertainment system onboard on its aircraft, which includes free live TV on select routes and premium movie channel offerings from JetBlue Features. Its entire fleet is equipped with Fly-Fi, a broadband product that allows gate-to-gate Wi-Fi at every seat. Customers also have access to the Fly-Fi Hub, a content portal where customers can access a wide range of additional content from their own personal devices. It also sells vacation packages through its wholly owned subsidiary, JetBlue Travel Products, LLC (JBTP), which offers one-stop, value-priced vacation services for self-directed packaged travel planning.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

JetBlue Airways Corporation has a Value Score of 69, which is considered to be undervalued.

JetBlue Airways Corporation’s price-to-book ratio is higher than its peers. This could make JetBlue Airways Corporation less attractive for value investors when compared to the industry median at 1.43.

You can read more about JetBlue Airways Corporation’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Airlines Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Airlines stocks as well as other industrys.

Choosing Which of the 4 Best Airlines Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• American Airlines Group Inc stock has a Value Grade of B.
• ANA Holdings Inc - ADR stock has a Value Grade of B.
• Flyexclusive Inc stock has a Value Grade of B.
• JetBlue Airways Corporation stock has a Value Grade of B.

Now that you have a bit more background about each of the 4 undervalued stocks in the Airlines industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Airlines Stocks

Want to learn more about Airlines stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 4 Undervalued Airlines Stocks for Monday, April 29
• 4 Undervalued Airlines Stocks for Friday, April 26
• 3 Undervalued Airlines Stocks for Thursday, April 25
• What You Need to Know About American Airlines Group Inc's Q1 Earnings

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.