In a p/e multiple of 6, is this stock of FTSE 100 an obvious purchase to consider in April?

Despite climbing 105% in five years, International Group of Consolidated Airlines (LSE: IAG) The trade of shares at a price to profits (p/e) multiple of 9. That is well below the Ftse 100 average of 17.

It is also well below the multiple that the actions negotiated a year ago, which was 21. So this is a great opportunity or is something else happening?

Operational leverage

Almost all businesses go through ups and downs, but some more than others. And airlines are some of the most volatile when it comes to profits. The biggest costs are fuel, staff, airport rates and airplanes. And what is more important, these are the same if a plane is 99% full or 60% empty.

That can be great when things are going well. To add more customers almost no additional cost means almost all revenues of ticket sales converts to earnings. Likewise, however, profits can evaporate quickly when demand falls and airlines end up flying less passengers without real reduction in costs. And IAG's p/e multiple is a reflection of this.

In general, the P/E relationship in which it is quoted in shares does not tell investors much about how cheap it is. What it does say is what the market expects from the underlying business.

When an action lies to a high multiple, it is a sign that investors anticipate growth. Likewise, a low -e relationship is a good indication that investors think there could be difficult times ahead.

Turbulence ahead?

IAG shares are quoted in a 9 -E ratio of 9 means that investors think this is as likely as they will obtain, at least for now. But it is worth noting that analysts do not seem to agree.

It is forecast that earnings per share will increase from 46p by 2024 to 71P in the next three years. If that happens, the action of the actions in a P/E multiple of around 4 based on the profits of 2028.

However, for my part, I am on the side of the market. I think there are a couple of reasons why invest based on a constant growth expectation in the coming years is quite risky.

One is the possibility of a recession. The United Kingdom is the largest market in IAG and I think that the possibility of Great Britain from entering an economic recession in the near future is unusually high at this time. Another is the risk of unique events, such as the recent fire in Heathrow. The financial impact on IAG is not clear, but reminds me of the interruption of IT in 2017 that cost the company £ 80m.

To some extent, all companies face exogenous threats. But the risk is higher for companies with high fixed costs, such as IAG, where the impact on profits is deeper.

April opportunity?

In equal conditions, it is better to buy shares with lower profits than a higher one. But with cyclical businesses like IAG, other things are not the same.

Going to April, much has gone for IAG. But this is when the risks are higher and investors must be more cautious. I think that is what a low p/e multiple is rightly reflecting.

There are some Ftse 100 shares that I seek to buy this month, but IAG is not one of them.