Is Cathay Pacific Airways Limited (HKG:293) Potentially Undervalued?

Cathay Pacific Airways Limited (HKG:293), might not be a large cap stock, but it saw significant share price movement during recent months on the SEHK, rising to highs of HK$8.49 and falling to the lows of HK$7.70. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Cathay Pacific Airways' current trading price of HK$8.41 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cathay Pacific Airways’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 Cathay Pacific Airways

What's The Opportunity In Cathay Pacific Airways?

According to our valuation model, Cathay Pacific Airways seems to be fairly priced at around 12% below our intrinsic value, which means if you buy Cathay Pacific Airways today, you’d be paying a fair price for it. And if you believe that the stock is really worth HK$9.51, then there’s not much of an upside to gain from mispricing. In addition to this, Cathay Pacific Airways has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of Cathay Pacific Airways look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Cathay Pacific Airways' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 293’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on 293, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Cathay Pacific Airways, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for Cathay Pacific Airways you should know about.

If you are no longer interested in Cathay Pacific 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.