Qantas Airways Limited (ASX:QAN), a airlines company based in Australia, received a lot of attention from a substantial price movement on the ASX in the over the last few months, increasing to A$6.45 at one point, and dropping to the lows of A$4.86. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Qantas Airways’s current trading price of A$5.19 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Qantas Airways’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Qantas Airways
What is Qantas Airways worth?
Great news for investors – Qantas Airways is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is A$10.9, but it is currently trading at A$5.19 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Qantas Airways’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from Qantas Airways?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by a double-digit 11.88% over the next couple of years, the outlook is positive for Qantas Airways. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? Since Qantas Airways is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.