Could the IAG share price get back above 400p? Here’s what the charts say…

Down 10% in a year, Mark David Hartley is checking the charts to see if the IAG share price can regain its pre-pandemic levels above 400p.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The 2020 pandemic lockdown grounded planes around the world, decimating the International Consolidated Airlines Group (LSE:IAG) share price.

The company operates several airlines including British Airways, Iberia, Vueling, and Aer Lingus. With passengers unable to fly during COVID, the company lost business. But despite air travel opening up again in the past years, International Consolidated Airlines Group shares are struggling to recover.

Currently trading at 145p, they’re a long way from the high of 486p reached in 2018. For the past year, the share price has fluctuated between 133p and 171p, down by 10% since February 2022.

Should you invest £1,000 in Barclays right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barclays made the list?

See the 6 stocks

But it climbed from 100p to 400p between 2012 and 2015, so can it do it again?

Let’s see what the charts say.

Price-to-earnings (P/E) ratio

P/E ratio gives us an idea of how well priced a stock is. It compares the share price with a company’s earnings, indicating whether the stock is undervalued. At 4.3 times, International Consolidated Airlines Group has a low P/E ratio, suggesting its share price is cheaper than it should be. By comparison, competitors easyJet and Wizz Air have P/E ratios of 13 and 23.6 times respectively. The industry average is 8.8 times.

A low P/E ratio could also be an indication that investor confidence is shaken, resulting in shares selling at a discount. While this could be a good time to get into the stock, its important to first evaluate whether the business is likely to improve going forward.

Created at Tradingview.com

Price-to-book (P/B) ratio

P/B ratio is another metric that I use to measure value. International Consolidated Airlines Group has a P/B ratio of 4.07, which is slightly higher than the industry average of 3.43. The P/B ratio is calculated by comparing a company’s market value to its book value, indicating whether shares are undervalued.

I get the book value by calculating total assets minus total liabilities. The company’s low P/B ratio suggests the share price could increase if improved earnings reinvigorate investor confidence.

Created at Tradingview.com

Debt-to-equity (D/E) ratio

Debt can be an asset to a business if it manages it properly. Almost all companies use debt to fund day-to-day operations and increase profits. But if not managed effectively, debt can ruin a business, potentially leading to bankruptcy.

The D/E ratio is a way of evaluating a company’s debt position with a single figure. It’s calculated by comparing how much debt a company has versus its shareholder equity.

With an estimated €19.6bn in debt and €2.08bn worth of equity, International Consolidated Airlines Group has a D/E ratio of 9.48, down from 23.35 in December 2021. For reference, most companies would try to keep this figure under one.

However, in International Consolidated Airlines Group’s case this isn’t as bad as it looks because the firm has a high level of operating cash flow. So despite the high level of debt, the interest payments are well covered by earnings before interest and taxes (EBIT), at 4.4 times.

Created at Tradingview.com

My verdict

As we can see from the charts above, several indicators are moving closer to pre-pandemic levels. International Consolidated Airlines Group is also reducing its debt level and covering its interest payments.

I can’t say for certain that the share price will regain 400p but it looks likely to improve. Analysts forecast an average price of around 200p in the coming 12 months, which I think is fair.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

2 FTSE 100 and FTSE 250 stocks to consider as stock markets plummet!

Looking for lifeboats as growth-crushing trade tariffs loom? Here are two (including a FTSE 100 gold stock) I think merit…

Read more »

Number three written on white chat bubble on blue background
Investing Articles

Just released: the 3 best growth-focused stocks to consider buying in April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer
Investing Articles

£10,000 invested in Watches of Switzerland shares 1 year ago is now worth…

Watches of Switzerland shares have been decimated by Trump’s tariffs on Switzerland. Dr James Fox explores whether this is an…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

Growth stocks are crashing! Here’s what I’m doing now

Our writer shares his thoughts as growth stocks get crushed, as well as a favourite from the Nasdaq that he…

Read more »

Investing Articles

What’s going on with the Nvidia share price now?

The Nvidia share price is tanking. Once the most valuable listed company, Nvidia has seen more than $1trn wiped off…

Read more »

Investing Articles

This FTSE AIM stock has £2.3bn in net cash, and a market cap of £2.4bn!

I love this FTSE AIM stock, but it really hasn’t delivered for me yet. The stock trades with crazily low…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

Down 15% in a week! Are these 5 FTSE 100 fallers screaming buys as markets plunge?

Five of Harvey Jones's favourite FTSE 100 stocks all have the same thing in common – they've fallen around 15%…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

2 stocks that have been crushed and now offer a ton of value

Edward Sheldon has been scanning the market for stocks that offer value after the sell-off. Here are two shares he…

Read more »