Image source: International Airlines Group
April was a pretty quiet month for International consolidated airline group (LSE:IAG) shares. After the release of 2023 results in February, investors had little to analyze in April. However, in May we will have the first quarter results, along with some other key developments that could influence the IAG share price much more. Here is the truth.
Next earnings
The big event to plan for is the first quarter results, which will be released on May 10. The key thing I'm watching for is confirmation that 2023 momentum still holds. In full-year results, pre-tax profit rose to just over €3 billion, the highest level since before the pandemic hit in 2020.
To me, this showed that the business is now back firing on all cylinders and has put the problems of the pandemic behind it. By 2024, the report noted that “Demand remains strong”. Furthermore, the company was “92% reserved for the first quarter of 2024 and 62% reserved for the first half of 2024”.
This makes 2024 a strong year, but investors will be interested to see if the first quarter results support this. One concern is whether consumers are feeling the pinch because the cost-of-living crisis still persists. If demand were to fall due to this, IAG's share price could falter.
Risk in the Middle East
Another current situation that must be paid attention to is the conflict in the Middle East. May could be a decisive month, with calls for a ceasefire to avoid further escalation.
This impacts IAG, because the firm flies to different locations in the Middle East, both for commercial and cargo purposes. Although it has not declared any impact so far, there are signs that it could be hampering business. For example, I noticed recent numbers from the competition. easyJet.
A couple of weeks ago, easyJet reported £40m worth of cancellations and £40m worth of lost flight bookings to the region.
We'll have to wait and see how things develop over the next few weeks. However, it clearly has the potential to impact IAG shares.
An undervalued stock for the watch list
When I look beyond next month, I see good potential for the stock to rise in the coming years. Of course, this depends on successfully completing the May events! However, assuming everything is positive, I would definitely consider adding the stock to my portfolio.
I feel like some investors are still ignoring stocks because they feel like they are still trapped under the cloud of the pandemic. Recent results clearly show that is not the case. However, with a P/E ratio of just 4, it is undervalued in my opinion.
The risk is that it remains undervalued for a long time, as it can take time for investors to change their opinion of a company. However, as we saw with Rolls-Royce Over the past year, once an undervalued stock starts to rise, it can really go up.
