Lufthansa: Cheap Stock to Take Off?

Last Updated: 11. Dezember 2023By

The stock markets are currently functioning well, so it seems. The DAX has met expectations for the year-end rally with its new all-time high. Nevertheless, the question remains whether there is not a value in the German leading index that indicates particularly attractive valuations. Lufthansa could represent such an opportunity – if it prepares for at least a somewhat stable economy.

Lufthansa: Low figures Firstly, it is noticeable that the company apparently has weathered the Corona period very well. At that time, no plane took off, revenues collapsed and costs exploded. All of this seems like a distant time. For the current year, a turnover of around 36 billion euros is expected – a nice result.

Lufthansa’s profit for the current year should amount to about 1.8 billion euros. This is a figure that analysts also expect for next year and that can be calculated. After all, the market has now equipped Lufthansa with a market value of almost exactly 10 billion euros. This means that the company has a price-earnings ratio (P/E ratio) of about 5.5 on the scales. This applies to this year as well as to the next (based on the current price).

The price-sales ratio (P/S ratio) of Lufthansa is around 0.45 in this year and slightly lower in the next year. Both key figures, the P/E ratio and the P/S ratio, basically show a very favorable valuation. To this you can expect a dividend yield of almost 3% as an investor. Basically everything fits.

How are the framework conditions for Lufthansa developing? I hold both the fundamental figures in view and in the background for favorable. There is no doubt that Lufthansa has survived the crisis. However, flying is not so easy to control.

Above all, the political framework conditions can make a big difference to the company. If taxes increase – this is being indirectly demanded as a concession by the FDP in the traffic light coalition – Lufthansa would certainly suffer at least for domestic flights. If fuel prices continue to rise – due to CO-2 taxes – this can also influence the framework conditions.

Warren Buffett once made it known that political dependencies such as with airlines are not exactly his wish. This is the price that investors in companies like Lufthansa always have to consider. In the Corona period this helped, in the climate protection period this can still be a burden. The share is cheap.