ANA Holdings (TSE:9202) Updated Its Outlook, Is The Stock Still Cheap?

ANA Holdings (TSE:9202) has given investors fresh information to assess the stock, combining first quarter earnings, new aircraft orders, updated full year guidance and dividend plans into a single, busy July update.

See our latest analysis for ANA Holdings.

The share price sits at ¥3,116.0 after a 1-day share price return that slipped 1.17%, though the 7-day share price return of 5.59% and 90-day share price return of 15.00% suggest recent momentum, while the 1-year total shareholder return of 12.38% points to steadier gains over a longer stretch.

If ANA Holdings' update has you rethinking the transport and infrastructure theme, it can be useful to compare it with companies linked to energy and grid demand by checking out 35 power grid technology and infrastructure stocks

After a strong 90 day move and fresh guidance from ANA Holdings on earnings, dividends and fleet spend, the real issue now is simple. Does the current valuation still leave enough upside to justify the risk?

Price-to-Earnings of 8.3x: Is it justified for ANA Holdings?

On a simple valuation check, ANA Holdings trades on a P/E of 8.3x, which screens as inexpensive relative to peers even after the recent share price strength.

The P/E ratio compares the current share price with earnings per share. For a business like ANA Holdings that is already profitable, this gives a quick sense of how much investors are paying for each unit of current earnings.

Several checks point in the same direction. The stock is flagged as trading at good value compared to peers and the broader industry. Its 8.3x P/E sits below the peer average of 12.2x, below the Asian Airlines industry average of 10.9x, and below the wider JP market level of 14x. Compared with an estimated fair P/E of 16.1x, the current multiple also sits at a discount that the market could, in time, move closer to if earnings and sentiment stay supportive.

Explore the SWS fair ratio for ANA Holdings

Result: Price-to-Earnings of 8.3x (UNDERVALUED).

However, earnings growth can stall if ANA Holdings faces weaker travel demand or higher operating costs. This could quickly challenge the current valuation case.

Find out about the key risks to this ANA Holdings narrative.

Another View on ANA Holdings Using Our DCF Model

The SWS DCF model paints a very different picture for ANA Holdings. On this view, the stock at ¥3,116 trades above an estimated future cash flow value of ¥994.51, which screens as overvalued. That raises a simple question: Is the earnings based valuation giving too much credit to current profitability?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ANA Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 19 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Mixed signals on valuation, risk and reward can feel unclear, so it helps to review the data for yourself and act while it is fresh in mind. To weigh up the concerns alongside the potential upside, start with the 4 key rewards and 1 important warning sign

Looking for more investment ideas beyond ANA Holdings?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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