Air Canada Valuation

Is AC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of AC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: AC (CA$23.21) is trading below our estimate of fair value (CA$254.12)

Significantly Below Fair Value: AC is trading below fair value by more than 20%.


Key Valuation Metric

Which metric is best to use when looking at relative valuation for AC?

Key metric: As AC is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for AC. This is calculated by dividing AC's market cap by their current earnings.
What is AC's PE Ratio?
PE Ratio3.3x
EarningsCA$2.55b
Market CapCA$8.39b

Price to Earnings Ratio vs Peers

How does AC's PE Ratio compare to its peers?

The above table shows the PE ratio for AC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average19.6x
EIF Exchange Income
21.7x26.4%CA$2.6b
CHR Chorus Aviation
18.1x69.5%CA$666.5m
TFII TFI International
26x23.2%CA$16.9b
9201 Japan Airlines
12.5x11.6%JP¥1.0t
AC Air Canada
3.3x-38.3%CA$8.4b

Price-To-Earnings vs Peers: AC is good value based on its Price-To-Earnings Ratio (3.3x) compared to the peer average (19.6x).


Price to Earnings Ratio vs Industry

How does AC's PE Ratio compare vs other companies in the Global Airlines Industry?

4 CompaniesPrice / EarningsEstimated GrowthMarket Cap
AC 3.3xIndustry Avg. 10.2xNo. of Companies9PE0612182430+
4 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Earnings vs Industry: AC is good value based on its Price-To-Earnings Ratio (3.3x) compared to the Global Airlines industry average (10.2x).


Price to Earnings Ratio vs Fair Ratio

What is AC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

AC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio3.3x
Fair PE Ratio5.7x

Price-To-Earnings vs Fair Ratio: AC is good value based on its Price-To-Earnings Ratio (3.3x) compared to the estimated Fair Price-To-Earnings Ratio (5.7x).


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst AC forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentCA$23.21
CA$26.32
+13.4%
13.7%CA$34.00CA$17.20n/a18
Nov ’25CA$21.51
CA$23.66
+10.0%
17.0%CA$32.00CA$17.20n/a18
Oct ’25CA$16.13
CA$22.53
+39.7%
22.7%CA$36.00CA$13.00n/a17
Sep ’25CA$15.44
CA$22.68
+46.9%
22.7%CA$36.00CA$13.00n/a17
Aug ’25CA$15.46
CA$23.29
+50.6%
24.6%CA$41.00CA$14.30n/a17
Jul ’25CA$17.90
CA$27.36
+52.9%
23.1%CA$41.00CA$14.30n/a17
Jun ’25CA$18.20
CA$27.88
+53.2%
22.1%CA$41.00CA$14.30n/a16
May ’25CA$20.46
CA$28.37
+38.6%
22.2%CA$41.00CA$14.00n/a16
Apr ’25CA$20.12
CA$28.40
+41.1%
22.1%CA$41.00CA$14.00n/a16
Mar ’25CA$18.12
CA$28.67
+58.2%
22.5%CA$41.00CA$14.00n/a15
Feb ’25CA$18.25
CA$28.93
+58.5%
21.6%CA$42.00CA$15.00n/a15
Jan ’25CA$18.69
CA$28.60
+53.0%
21.8%CA$42.00CA$15.00n/a15
Dec ’24CA$17.74
CA$28.60
+61.2%
21.8%CA$42.00CA$15.00n/a15
Nov ’24CA$16.61
CA$28.60
+72.2%
21.8%CA$42.00CA$15.00CA$21.5115
Oct ’24CA$19.38
CA$31.54
+62.7%
15.6%CA$38.00CA$18.00CA$16.1314
Sep ’24CA$22.77
CA$30.93
+35.9%
17.0%CA$38.00CA$18.00CA$15.4415
Aug ’24CA$23.89
CA$29.74
+24.5%
17.4%CA$38.00CA$18.30CA$15.4615
Jul ’24CA$24.99
CA$29.14
+16.6%
18.4%CA$38.00CA$18.30CA$17.9015
Jun ’24CA$21.71
CA$29.52
+36.0%
16.4%CA$38.00CA$22.00CA$18.2015
May ’24CA$19.19
CA$26.72
+39.2%
15.2%CA$35.00CA$20.00CA$20.4615
Apr ’24CA$19.15
CA$26.65
+39.2%
15.4%CA$35.00CA$20.00CA$20.1215
Mar ’24CA$20.04
CA$27.08
+35.1%
17.8%CA$40.00CA$20.00CA$18.1215
Feb ’24CA$22.66
CA$27.69
+22.2%
17.0%CA$40.00CA$21.00CA$18.2516
Jan ’24CA$19.39
CA$27.06
+39.6%
17.2%CA$40.00CA$21.00CA$18.6916
Dec ’23CA$19.10
CA$27.00
+41.4%
17.1%CA$40.00CA$21.00CA$17.7416
Nov ’23CA$20.15
CA$26.88
+33.4%
17.4%CA$40.00CA$21.00CA$16.6116

Analyst Forecast: Target price is less than 20% higher than the current share price.


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