Positions:
https://preview.redd.it/ynqr0i80j5je1.png?width=2540&format=png&auto=webp&s=abc925b48b084ed2d9cc89a34dadc488add3faa6
Air Canada (AC.TO) released earnings yesterday. Revenue increased more than anticipated, and EPS was just as with projections. They were able to perform in-line with the bullish guidance that they'd provided earlier in the year, and announced a buyback of 10% of shares later this year. This company recently resolved a strike threat from its pilots, and are more profitable than they were a year ago.
Presently, Air Canada has a valuation of $6.3B. Based on market cap and region, its nearest comparable is American Airlines, which has a PE ratio of 13.5. Onex (the parent company of WestJet, which is Canada's other main airline) has a PE ratio of 7.9. Air Canada's current PE ratio is 2.6.
Given the positive guidance, the deep discount compared to its peers, and the relatively weak Canadian dollar right now, buying this seems like a no brainer. Even if the PE ratio were to climb to 6.5 (a 50% discount in comparison to its peers), this would correspond with a share price of $44.
That would be a 150% pump from the current share price of $17.75.
There's an opportunity here.