Low-Flying Airline Multiples Are On Hedge Fund Manager Leon Cooperman's Radar

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Billionaire hedge fund manager Leon Cooperman was a guest on
CNBC's "Fast Money: Halftime Report"
Wednesday to discuss his holdings and views on the market.

Cooperman said that he is attracted to the airline sector given stable fuel costs as well as a "ridiculously low" valuation for the group. For instance, United Continental Holdings Inc UAL is trading at just 5.2 times what his firm expects the company to earn next year.

Cooperman added that United Continental's share buyback program implies the company will buy back 8 percent of its entire stock.

Cooperman didn't go into greater detail, but taking a look at the group reveals the vast majority of airliners are trading with a P/E multiple below 10. The two exceptions include Hawaiian Holdings, Inc. HA, which is trading at a P/E multiple of 11.07 and SkyWest, Inc. SKYW at 10.15.

The average P/E multiple for the S&P 500 index is 25.04, so Cooperman may have a very valid point regarding the airline sector.

Related Link: Terms Of The Trade: Price-To-Earnings And Price-To-Earnings Growth

Here is a compilation of some of the P/E ratios of other airline stocks, according to Google Finance:

  • United Continental Holdings Inc: 2.85.
  • American Airlines Group Inc AAL: 3.49.
  • Delta Air Lines, Inc. DAL: 5.98.
  • JetBlue Airways Corporation JBLU: 7.09.
  • Virgin America Inc VA: 7.80.
  • Spirit Airlines Incorporated SAVE: 9.34.
  • Alaska Air Group, Inc. ALK: 9.37.
  • Southwest Airlines Co LUV: 9.76.
  • Allegiant Travel Company ALGT: 9.83.

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Posted In: Analyst ColorCNBCHedge FundsBuybacksTravelAnalyst RatingsMediaTrading IdeasGeneralAirline Multiplesairline stocksLeon CoopermanP/E Multiples
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