Is United Airlines (UAL) Stock Undervalued Right Now?

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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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). UAL is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.98. This compares to its industry's average Forward P/E of 10.43. Over the past year, UAL's Forward P/E has been as high as 9.45 and as low as 4.45, with a median of 7.52.

Another notable valuation metric for UAL is its P/B ratio of 2.57. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 3.01. UAL's P/B has been as high as 2.95 and as low as 1.45, with a median of 2.19, over the past year.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. UAL has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.64.

Finally, our model also underscores that UAL has a P/CF ratio of 5.58. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. UAL's current P/CF looks attractive when compared to its industry's average P/CF of 6.45. Over the past year, UAL's P/CF has been as high as 6.11 and as low as 2.84, with a median of 4.68.

These are only a few of the key metrics included in United Airlines's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, UAL looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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