Stock Analysis

When Should You Buy Air New Zealand Limited (NZSE:AIR)?

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NZSE:AIR
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Air New Zealand Limited (NZSE:AIR), is not the largest company out there, but it saw significant share price movement during recent months on the NZSE, rising to highs of NZ$1.67 and falling to the lows of NZ$1.41. 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 Air New Zealand's current trading price of NZ$1.51 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Air New Zealand’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Air New Zealand

Is Air New Zealand still cheap?

Good news, investors! Air New Zealand is still a bargain right now. My valuation model shows that the intrinsic value for the stock is NZ$2.11, but it is currently trading at NZ$1.51 on the share market, meaning that there is still an opportunity to buy now. However, given that Air New Zealand’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Air New Zealand generate?

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NZSE:AIR Earnings and Revenue Growth February 27th 2022

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. In the upcoming year, Air New Zealand's earnings are expected to increase by 42%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since AIR is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on AIR for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy AIR. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

If you want to dive deeper into Air New Zealand, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Air New Zealand has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Air New Zealand, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether Air New Zealand is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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