At ₩26,050, Is It Time To Put Korean Air Lines Co., Ltd. (KRX:003490) On Your Watch List?

Korean Air Lines Co., Ltd. (KRX:003490), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the KOSE. 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 Korean Air Lines’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Korean Air Lines

What is Korean Air Lines worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 6.99% above my intrinsic value, which means if you buy Korean Air Lines today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is ₩24348.98, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Korean Air Lines’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

Can we expect growth from Korean Air Lines?

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. With profit expected to grow by 76% over the next year, the near-term future seems bright for Korean Air Lines. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in A003490’s positive outlook, 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on A003490, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Korean Air Lines as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for Korean Air Lines you should be mindful of and 1 of them makes us a bit uncomfortable.

If you are no longer interested in Korean Air Lines, 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. 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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