ASX:QAN

Stock Analysis Report

Executive Summary

Qantas Airways Limited provides passenger and freight air transportation services in Australia and internationally.

Rewards

Trading at 10.2% below its fair value

Earnings are forecast to grow 3.39% per year

Risk Analysis

Has a high level of debt

Unstable dividend track record



Snowflake Analysis

Average dividend payer and fair value.


Similar Companies

Share Price & News

How has Qantas Airways's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: QAN has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-5.8%

QAN

-4.2%

AU Airlines

0.6%

AU Market


1 Year Return

8.8%

QAN

1.5%

AU Airlines

20.2%

AU Market

Return vs Industry: QAN exceeded the Australian Airlines industry which returned 8.8% over the past year.

Return vs Market: QAN underperformed the Australian Market which returned 19.4% over the past year.


Shareholder returns

QANIndustryMarket
7 Day-5.8%-4.2%0.6%
30 Day-9.1%-6.9%4.3%
90 Day6.6%4.1%4.9%
1 Year13.6%8.8%6.9%1.5%25.6%20.2%
3 Year110.7%90.3%74.0%54.6%39.4%20.7%
5 Year192.4%143.3%60.8%33.0%60.8%24.6%

Price Volatility Vs. Market

How volatile is Qantas Airways's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Qantas Airways undervalued compared to its fair value and its price relative to the market?

15.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: QAN (A$7.04) is trading below our estimate of fair value (A$7.84)

Significantly Below Fair Value: QAN is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: QAN is good value based on its PE Ratio (12.4x) compared to the Airlines industry average (12.6x).

PE vs Market: QAN is good value based on its PE Ratio (12.9x) compared to the Australian market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: QAN is poor value based on its PEG Ratio (3.8x)


Price to Book Ratio

PB vs Industry: QAN is overvalued based on its PB Ratio (3.2x) compared to the XO Airlines industry average (1.9x).


Next Steps

Future Growth

How is Qantas Airways forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

3.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: QAN's forecast earnings growth (3.4% per year) is above the savings rate (1.1%).

Earnings vs Market: QAN's earnings (3.4% per year) are forecast to grow slower than the Australian market (9.6% per year).

High Growth Earnings: QAN's earnings are forecast to grow, but not significantly.

Revenue vs Market: QAN's revenue (2.4% per year) is forecast to grow slower than the Australian market (3.8% per year).

High Growth Revenue: QAN's revenue (2.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: QAN's Return on Equity is forecast to be high in 3 years time (28.6%)


Next Steps

Past Performance

How has Qantas Airways performed over the past 5 years?

49.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: QAN has high quality earnings.

Growing Profit Margin: QAN's current net profit margins (5%) are lower than last year (5.6%).


Past Earnings Growth Analysis

Earnings Trend: QAN has become profitable over the past 5 years, growing earnings by 49.8% per year.

Accelerating Growth: QAN's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: QAN had negative earnings growth (-6.5%) over the past year, making it difficult to compare to the Airlines industry average (-2.5%).


Return on Equity

High ROE: Whilst QAN's Return on Equity (25.93%) is high, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Qantas Airways's financial position?


Financial Position Analysis

Short Term Liabilities: QAN's short term assets (A$4.2B) do not cover its short term liabilities (A$8.6B).

Long Term Liabilities: QAN's short term assets (A$4.2B) do not cover its long term liabilities (A$7.4B).


Debt to Equity History and Analysis

Debt Level: QAN's debt to equity ratio (115.9%) is considered high.

Reducing Debt: QAN's debt to equity ratio has reduced from 180.5% to 115.9% over the past 5 years.

Debt Coverage: QAN's debt is well covered by operating cash flow (70.5%).

Interest Coverage: QAN's interest payments on its debt are well covered by EBIT (7.8x coverage).


Balance Sheet

Inventory Level: QAN has a high level of physical assets or inventory.

Debt Coverage by Assets: QAN's debt is covered by short term assets (assets are 1.1x debt).


Next Steps

Dividend

What is Qantas Airways's current dividend yield, its reliability and sustainability?

3.90%

Current Dividend Yield


Dividend Yield vs Market

company3.9%marketbottom25%2.3%markettop25%5.6%industryaverage2.5%forecastin3Years4.2%

Current dividend yield vs market & industry

Notable Dividend: QAN's dividend (3.69%) is higher than the bottom 25% of dividend payers in the Australian market (2.34%).

High Dividend: QAN's dividend (3.69%) is low compared to the top 25% of dividend payers in the Australian market (5.47%).


Stability and Growth of Payments

Stable Dividend: QAN's dividend payments have been volatile in the past 10 years.

Growing Dividend: QAN's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (45.8%), QAN's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: QAN's dividends in 3 years are forecast to be well covered by earnings (38.3% payout ratio).


Next Steps

Management

What is the CEO of Qantas Airways's salary, the management and board of directors tenure and is there insider trading?

3.6yrs

Average management tenure


CEO

Alan Joyce (53yo)

11.2yrs

Tenure

AU$6,565,000

Compensation

Mr. Alan Joseph Joyce, AC, BApplSc(Phy)(Math)(Hons), MSc(MgtSc), MA, FRAeS, FTSE has been the Chief Executive Officer and President of Qantas Group at Qantas Freight Enterprises Ltd. since November 2008 an ...


CEO Compensation Analysis

Compensation vs Market: Alan's total compensation ($USD4.53M) is above average for companies of similar size in the Australian market ($USD2.84M).

Compensation vs Earnings: Alan's compensation has been consistent with company performance over the past year.


Management Age and Tenure

3.6yrs

Average Tenure

53yo

Average Age

Experienced Management: QAN's management team is considered experienced (2.4 years average tenure).


Board Age and Tenure

5.7yrs

Average Tenure

61yo

Average Age

Experienced Board: QAN's board of directors are considered experienced (5.7 years average tenure).


Insider Trading

Insider Buying: QAN insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyAU$102,95005 Jan 20
BlackRock, Inc.
EntityCompany
Shares29,808
Max PriceAU$7.16
BuyAU$186,434,66801 Jan 20
BlackRock, Inc.
EntityCompany
Shares52,773,664
Max PriceAU$7.42
SellAU$162,114,74506 Nov 19
Pendal Group Limited
EntityCompany
Shares26,608,997
Max PriceAU$6.40
BuyAU$29,080,38906 Nov 19
Pendal Group Limited
EntityCompany
Shares4,969,255
Max PriceAU$6.09
BuyAU$43,75028 Oct 19
Todd Sampson
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares7,000
Max PriceAU$6.25
BuyAU$86,712,20123 Oct 19
AllianceBernstein L.P.
EntityCompany
Shares14,766,025
Max PriceAU$6.13
SellAU$23,073,03823 Oct 19
AllianceBernstein L.P.
EntityCompany
Shares4,022,856
Max PriceAU$6.30
BuyAU$767,48523 Oct 19
AllianceBernstein (Singapore) Ltd.
EntityCompany
Shares129,297
Max PriceAU$5.94
BuyAU$585,89430 Aug 19
Alan Joyce
EntityIndividual
Role
Chief Executive Officer
CEO, MD & Executive Director
Shares97,768
Max PriceAU$5.99
SellAU$8,970,45330 Aug 19
Alan Joyce
EntityIndividual
Role
Chief Executive Officer
CEO, MD & Executive Director
Shares1,519,012
Max PriceAU$5.91
BuyAU$17,04018 Jun 19
Michael L'Estrange
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares3,000
Max PriceAU$5.68
BuyAU$360,495,76806 Jun 19
Pendal Group Limited
EntityCompany
Shares63,841,783
Max PriceAU$5.65
SellAU$341,813,22906 Jun 19
Pendal Group Limited
EntityCompany
Shares60,499,691
Max PriceAU$5.96
BuyAU$171,90004 Mar 19
Richard James Goyder
EntityIndividual
Role
Chairman of the Board
Independent Chairman
Shares30,000
Max PriceAU$5.73

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Andrew David (58yo)

    Chief Executive Officer of Qantas Domestic & Freight

    • Tenure: 4.8yrs
    • Compensation: AU$2.37m
  • Alan Joyce (53yo)

    CEO, MD & Executive Director

    • Tenure: 11.2yrs
    • Compensation: AU$6.57m
  • Gareth Evans

    Chief Executive Officer of Jetstar Group

    • Tenure: 2.4yrs
    • Compensation: AU$2.60m
  • Olivia Wirth

    Chief Executive Officer of Qantas Loyalty

    • Tenure: 2.4yrs
    • Compensation: AU$1.95m
  • Alan Milne (53yo)

    Head of Fuel & Environment

    • Tenure: 7.3yrs
  • Andrew Finch

    General Counsel

    • Tenure: 7.2yrs
  • Vanessa Hudson

    Chief Financial Officer

    • Tenure: 0.3yrs
  • Rob Marcolina

    Group Executive

    • Tino La Spina

      Chief Executive Officer of Qantas International

      • Tenure: 0.3yrs
      • Compensation: AU$2.33m
    • Frances Reyk

      Head of Investor Relations


      Board Members

      • Paul Rayner (65yo)

        Independent Non Executive Director

        • Tenure: 11.5yrs
        • Compensation: AU$317.00k
      • Richard James Goyder (59yo)

        Independent Chairman

        • Tenure: 1.3yrs
        • Compensation: AU$584.00k
      • Belinda Hutchinson (66yo)

        Independent Non-Executive Director

        • Tenure: 1.8yrs
        • Compensation: AU$283.00k
      • Tony Tyler (63yo)

        Independent Non-Executive Director

        • Tenure: 1.3yrs
        • Compensation: AU$162.00k
      • Barbara Ward (65yo)

        Independent Non-Executive Director

        • Tenure: 11.6yrs
        • Compensation: AU$320.00k
      • Alan Joyce (53yo)

        CEO, MD & Executive Director

        • Tenure: 11.2yrs
        • Compensation: AU$6.57m
      • Michael L'Estrange (66yo)

        Independent Non-Executive Director

        • Tenure: 3.8yrs
        • Compensation: AU$223.00k
      • Jacquie Hey (53yo)

        Independent Non-Executive Director

        • Tenure: 6.4yrs
        • Compensation: AU$211.00k
      • Maxine Brenner (57yo)

        Independent Non-Executive Director

        • Tenure: 6.4yrs
        • Compensation: AU$364.00k
      • Todd Sampson (48yo)

        Independent Non-Executive Director

        • Tenure: 4.9yrs
        • Compensation: AU$271.00k

      Company Information

      Qantas Airways Limited's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Qantas Airways Limited
      • Ticker: QAN
      • Exchange: ASX
      • Founded: 1920
      • Industry: Airlines
      • Sector: Transportation
      • Market Cap: AU$9.955b
      • Shares outstanding: 1.47b
      • Website: https://www.qantas.com

      Number of Employees


      Location

      • Qantas Airways Limited
      • 10 Bourke Road
      • Mascot
      • New South Wales
      • 2020
      • Australia

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      QUBS.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDAug 1995
      QANASX (Australian Securities Exchange)YesOrdinary SharesAUAUDAug 1995
      QANDB (Deutsche Boerse AG)YesOrdinary SharesDEEURAug 1995
      QANCHIA (Chi-X Australia)YesOrdinary SharesAUAUDAug 1995
      QABS.YOTCPK (Pink Sheets LLC)SPONSORED ADR NEUSUSDApr 2014

      Biography

      Qantas Airways Limited provides passenger and freight air transportation services in Australia and internationally. The company also offers air cargo and express freight services; and customer loyalty programs. As of June 30, 2019, it operated a fleet of 314 aircraft. The company was founded in 1920 and is headquartered in Mascot, Australia. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/23 10:31
      End of Day Share Price2020/01/23 00:00
      Earnings2019/06/30
      Annual Earnings2019/06/30


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.