Is Now The Time To Look At Buying Qantas Airways Limited (ASX:QAN)?

While Qantas Airways Limited (ASX:QAN) might not have the largest market cap around , it saw a decent share price growth of 12% on the ASX over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an 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 the opportunity still exists.

Check out our latest analysis for Qantas Airways

What's The Opportunity In Qantas Airways?

According to our valuation model, the stock is currently overvalued by about 23%, trading at AU$5.77 compared to our intrinsic value of A$4.70. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Qantas Airways’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Qantas Airways look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with a negative profit growth of -4.3% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Qantas Airways. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? If you believe QAN is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the uncertainty from negative growth in the future, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on QAN for some time, now may not be the best time to enter into the stock. you may want to reconsider buying the stock at this time. The company’s price has climbed passed its true value, in addition to a risky future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?

If you'd like to know more about Qantas Airways as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Qantas Airways and you'll want to know about it.

If you are no longer interested in Qantas Airways, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.