Air France KLM Crashes

Air France KLM plunged -8.4% change Friday, and is now trading at a price of $1.7 per share.

Air France KLM returned losses of -15.0% last year, with its stock price reaching a high of $2.01 and a low of $1.14. Over the same period, the stock underperformed the S&P 500 index by -17.0%. As of April 2023, the company's 50-day average price was $1.75. Air France-KLM SA, together with its subsidiaries, provides passenger and cargo transportation services and aeronautical maintenance in Metropolitan France, Benelux, rest of Europe, and internationally. Based in Paris, France, the Mid-Cap Industrials company has 58,186 full time employees. Air France KLM has not offered a regular dividend during the last year.

The Company's Revenues Are Declining:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $27,189 $11,088 $14,315 $26,393
Gross Margins 32.0% 0.0% 21.7% 30.2%
Operating Margins 4.0% -41.9% -11.5% 3.9%
Net Margins 1.07% -63.83% -23.0% 2.76%
Net Income (MM) $290 -$7,078 -$3,292 $728
Net Interest Income -$614,000 -$641,000 -$831,000 -$677,000
Depreciation & Amort. -$2,987,000 -$2,859,000 -$2,371,000 -$2,422,000
Earnings Per Share $0.31 -$8.38 -$5.95 $1.1
EPS Growth n/a -2803.23% 29.0% 118.49%
Diluted Shares (MM) 903 847 579 2,569
Free Cash Flow (MM) $523 -$4,925 -$668 $1,884
Capital Expenditures (MM) -$3,372 -$2,099 -$2,202 -$2,972
Net Current Assets (MM) -$19,897 -$25,734 -$23,770 -$23,778
Current Ratio 0.68 0.84 0.91 0.81
Long Term Debt (MM) $3,333 $11,263 $8,373 $6,494
Net Debt / EBITDA 0.36 -2.01 -10.1 0.47

Air France KLM's financial statements include several red flags such as weak revenue growth and decreasing reinvestment in the business, slimmer gross margins than its peers, and consistently negative margins with a stable trend. Additionally, the firm has an unconvincing cash flow history. On the other hand, the company benefits from low leverage and a strong EPS growth Trend.

Air France KLM Is Fairly Valued:

Air FranceKLM has a trailing twelve month P/E ratio of 1.6 compared to the Industrials sector's average of 20.49. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 4 years of reported EPS is 37.2%. On this basis, Air FranceKLM's PEG ratio is 0.04. Using instead the 11.0% weighted average of Air FranceKLM's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 0.14, which implies that its shares may be underpriced.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.