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

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

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 (NYSE: 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. (NASDAQ: HA), which is trading at a P/E multiple of 11.07 and SkyWest, Inc. (NASDAQ: 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 (NASDAQ: AAL): 3.49.
  • Delta Air Lines, Inc. (NYSE: DAL): 5.98.
  • JetBlue Airways Corporation (NASDAQ: JBLU): 7.09.
  • Virgin America Inc (NASDAQ: VA): 7.80.
  • Spirit Airlines Incorporated (NASDAQ: SAVE): 9.34.
  • Alaska Air Group, Inc. (NYSE: ALK): 9.37.
  • Southwest Airlines Co (NYSE: LUV): 9.76.
  • Allegiant Travel Company (NASDAQ: ALGT): 9.83.

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Latest Ratings for UAL

DateFirmActionFromTo
Feb 2021Deutsche BankUpgradesHoldBuy
Jan 2021SusquehannaMaintainsNeutral
Dec 2020JP MorganDowngradesOverweightUnderweight

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