IAG stock shows surprising value despite massive price jump this year

The International Airlines Group (IAG) stock presents an odd market case - despite jumping over 50% since Jan‚ its still trades at a super-low price-to-earnings ratio of 5.7 (which is rare for FTSE 100 companies)

Third-quarter numbers show some solid growth: passenger revenue up 9.2%‚ total revenue climbing 7.9% and a nice bump in operating profits reaching 15.4%. The companyʼs load-factor went up too and they announced a share buy-back worth €350m (thats about 2.4% of market value)

The air-travel sector faces some real-world issues - net-zero targets environmental rules and possible trade changes if theres political shifts in USA. But the International Air Transport Association thinks global passenger numbers will grow about 6.3% yearly till 2027; which matches well with IAGs plans to boost capacity 6% this year

The companys financial health looks pretty good: theyʼve got €13.3bn in total liquidity (up from last years €11.6bn) and their interest coverage ratio is around 9 for the first three quarters. Having different airline brands at various price-points gives them an edge over one-brand competitors

• UK inflation staying near Bank of Englands 2% goal
• Real wages keep growing as rates drop
• US and Eurozone monetary policies look good
• These markets make up 70% of IAGs revenue

Since our first buy tip about three-and-half years ago the stock jumped 45% beating FTSE 100 by 26 points. While airline stocks can be shaky IAGs safety margin and solid numbers make it worth buying