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Low-Flying Airline Multiples Are On Hedge Fund Manager Leon Cooperman's Radar

United Continental Holdings, Inc. NYSE:UAL, AAL - Low-Flying Airline Multiples Are On Hedge Fund Manager Leon Cooperman's Radar

Billionaire hedge fund manager Leon Cooperman was a guest on CNBC's "Fast Money: Halftime Report" Wednesday to discuss his holdings and views on the market.

Cooperman said that he is attracted to the airline sector given stable fuel costs as well as a "ridiculously low" valuation for the group. For instance, United Continental Holdings Inc UAL 0.95% is trading at just 5.2 times what his firm expects the company to earn next year.

Cooperman added that United Continental's share buyback program implies the company will buy back 8 percent of its entire stock.

Cooperman didn't go into greater detail, but taking a look at the group reveals the vast majority of airliners are trading with a P/E multiple below 10. The two exceptions include Hawaiian Holdings, Inc. HA 0.66%, which is trading at a P/E multiple of 11.07 and SkyWest, Inc. SKYW 0.25% at 10.15.

The average P/E multiple for the S&P 500 index is 25.04, so Cooperman may have a very valid point regarding the airline sector.

Here is a compilation of some of the P/E ratios of other airline stocks, according to Google Finance:

  • United Continental Holdings Inc: 2.85.

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DateFirmActionFromTo
Aug 2016Raymond JamesUpgradesMarket PerformOutperform
Aug 2016Imperial CapitalInitiates Coverage onOutperform
Jul 2016JP MorganMaintainsOverweight

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