Qantas (ASX:QAN): Exploring Valuation After Strong Share Price Momentum

Qantas Airways (ASX:QAN) has quietly turned heads with its steady rise in 2024, catching both seasoned investors and newcomers off guard. While there hasn't been a dramatic event to trigger recent market attention, the company’s stock movement itself is enough to spark fresh debate about its underlying value. When price momentum picks up for a familiar name like Qantas, it often hints that something more may be brewing beneath the surface, even if the catalyst is not immediately obvious.

Looking at the broader picture, Qantas has shown resilience throughout the past year. In just the past month, shares climbed nearly 8%, stacking up to a remarkable 78% gain over twelve months. The momentum extends even further when you zoom out. Qantas has more than doubled its value over three years and is up over 200% across five years. These results have come amid routine airline industry volatility as well as the company's own performance improvements, setting a higher bar for expectations from here.

So after this exceptional run, it’s worth asking: does Qantas still have room to surprise the market, or is the recent share price already factoring in its growth story?

Most Popular Narrative: 7.2% Undervalued

According to the most popular narrative among analysts, Qantas Airways appears modestly undervalued, with a fair value slightly above its current share price. This view draws on forward-looking expectations for growth, profit margins, and operational improvements.

“Fleet renewal is expected to accelerate, with 18 new aircraft this year and 21 next year, unlocking EBIT benefits and driving future growth through operational efficiencies and increased capacity. This will likely have a positive impact on net margins and earnings as new aircraft improve cost structures.”

Want to uncover the backbone of this bullish outlook? The narrative teases a transformation fueled by aggressive fleet investment and a daring dual-brand play. Consider soaring earnings projections and a profit multiple that signals strong confidence in Qantas’s next chapter. If you want to know exactly what numbers are pushing this fair value higher, get ready because the full narrative reveals the financial assumptions behind this target.

Result: Fair Value of $12.70 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent cost pressures from new legislation and rising global competition could quickly challenge these bullish profit forecasts if not well managed.

Find out about the key risks to this Qantas Airways narrative.

Another View: Market Compares Differently

Looking at Qantas from another angle, market comparisons suggest the shares could be more expensive than they seem, especially compared to global airline peers. This highlights the question of whether future growth is already factored into the current price.

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding Qantas Airways to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Qantas Airways Narrative

If you see the numbers differently or want a hands-on approach, dive in and build your own perspective in just minutes. Do it your way

A great starting point for your Qantas Airways research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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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.

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