Yahoo Finance Is It Time To Buy Hawaiian Holdings Inc (NASDAQ:HA)?
Hawaiian Holdings Inc (NASDAQ:HA), a airlines company based in United States, saw significant share price volatility over the past couple of months on the NasdaqGS, rising to the highs of $42.45 and falling to the lows of $35.4. 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 Hawaiian Holdings’s current trading price of $38.4 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Hawaiian Holdings’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 Hawaiian Holdings
What is Hawaiian Holdings worth?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 5.61x is currently trading slightly below its industry peers’ ratio of 10.24x, which means if you buy Hawaiian Holdings today, you’d be paying a fair price for it. And if you believe that Hawaiian Holdings should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Hawaiian Holdings’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Hawaiian Holdings generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a negative profit growth of -11.79% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Hawaiian Holdings. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? HA seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on HA, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on HA for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on HA should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Hawaiian Holdings. You can find everything you need to know about Hawaiian Holdings in the latest infographic research report. If you are no longer interested in Hawaiian Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
