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Is the AA share price (LON:AA) cheap at 67p?

Jack Brumby

AA (LON:AA.is an historic association founded in 1905, which provides car insurance, driving lessons, breakdown cover, loans, motoring advice, road maps and other services. Recently, the group has stumbled and is today actually classified as a mid cap,  a mid cap despite generating sales of £979m. 

This is in part due to balance sheet health - the company has a pension deficit and carries some £2.705bn of net debt on its books - and recent trading - for the fiscal year ended 31 January 2019, AA PLC revenues increased 2% to £979m but net income decreased 62% to £42m.

Right now the AA share price displays favourable value traits, however, as evidenced by its Value Rank of 90. Let's explore this in more detail.

GET MORE DATA-DRIVEN INSIGHTS INTO LON:AA. »

Breaking down AA's Value Rank

We can see by using AA's StockReport that the group has a:

  • Trailing twelve month price to earnings ratio of 5.73
  • Trailing twelve month price to free cashflow of 2.36
  • Rolling dividend yield of 2.96%
  • Trailing twelve-month price to sales ratio of 0.42

This combination of financial traits suggests that AA stock might be good value at current levels, although further research is required if this is to be confirmed.

Studies indicate that combining factors such as Value, Quality and Momentum is a more effective way of outperforming the market over longer time frames. That's why we have constructed our StockReports to give an instant impression of how well exposed Aa (LON:AA.) is to these three factors. We go into greater detail on factor investing in this video

Stockopedia helps you to identify return-enhancing factors such as Quality, Value and Momentum by analysing thousands of data points every day. To find out more about you find investment opportunities and analyse your portfolios then take one of our two-week free trials and have a look around.