American Airlines (AAL)

[Ralph Canine]

Here is another reason for you;

We would not have purchased $753 million of our stock in the quarter at an average price of $43.53, if we thought the stock wasn't worth more than $43.53. ... So what I'm getting at is the focus on -- the intense focus on unit revenues is ... important, but I'm just encouraged here if I look at valuation...
-- Doug Parker

Parker pointed out that AAL aggressively repurchased stock last quarter. He made it clear that the company isn't just buying stock to try to prop up the stock price or juice EPS. It is buying back stock because it sees the shares as being extremely undervalued.

Considering that the stock currently trades for less than 5 times projected 2015 pre-tax earnings, it's hard to disagree. Even if American experiences some margin deterioration next year, there's a big margin of safety for investors at the current valuation.

It's clear that American's downbeat outlook for unit revenue over the next 12 months caused the stock's big slide last Friday. But as Parker implied, investors should probably be paying more attention to the stock's bargain-basement valuation than to the near-term revenue outlook.

This is from a recent Motley Fool article.