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Jet2 plc (LON:JET2), might not be a large cap stock, but it saw significant share price movement during recent months on the AIM, rising to highs of UK£15.83 and falling to the lows of UK£11.59. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Jet2's current trading price of UK£12.32 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 Jet2’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is Jet2 Worth?
Good news, investors! Jet2 is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Jet2’s ratio of 5.33x is below its peer average of 7.44x, which indicates the stock is trading at a lower price compared to the Airlines industry. What’s more interesting is that, Jet2’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
View our latest analysis for Jet2
What does the future of Jet2 look like?
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Jet2, it is expected to deliver a negative earnings growth of -3.5%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Although JET2 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to JET2, or whether diversifying into another stock may be a better move for your total risk and return.