Air France-KLM : Very little upside potential, so the risk for a correction is significant
| Entry price | Target | Stop-loss | Potential |
|---|
|
€10.8 |
€9.97 |
€11.25 |
+7.64% |
|---|
The price of shares in Air France-KLM is close to a major medium term resistance level around 10.94 EUR. A correction phase over the short term appears to be the logical outcome.
Strengths● The company shows low valuation levels, with an enterprise value at 0.43 times its sales.
● Its low valuation, with P/E ratio at 10.04 and 7.34 for the ongoing fiscal year and 2020 respectively, makes the stock pretty attractive with regard to earnings multiples.
● The share is close to its long-term resistance in weekly data. Therefore, the potential should be limited. However, a further bullish movement when crossing this resistance will be a positive signal.
● The stock is currently in contact with a medium-term resistance that must be gotten rid of so as to resume the upward trend.
● According to forecast, a sluggish sales growth is expected for the next fiscal years.
● The company has insufficient levels of profitability.
● Prospects from analysts covering the stock are not consistent. Such dispersed sales estimates confirm the poor visibility into the group's activity.
● The firm pays small or no dividend to shareholders. For that reason, it is not a yield company.
● For the last four months, earnings estimated by analysts have been revised downwards with respect to the next two years.
● For the past year, analysts have significantly revised downwards their profit estimates.
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