Value
9.4/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 10.0 |
| P/S | 10.0 |
| EV/EBITDA | 8.8 |
| Fwd P/E | 9.4 |
| Analyst target | 9.0 |
- ▸Forward P/E: 9.2x
- ▸Attractively valued
AERO · Why this verdict
Why Grupo Aeromexico (AERO) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Grupo Aeromexico offers a significant margin of safety of 95% and 37% upside to the analyst price target at a 5.3-to-1 reward/risk ratio, with strong free cash flow conversion of 144% of net income; the central risk is a widely anticipated ~92% earnings decline as the airline cycle reverses from its current peak, which, if it materializes, would sharply compress the apparent cheapness of the current valuation.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At current prices, the stock offers 37% upside to the analyst price target, with analyst consensus implying approximately 58% upside from current levels; the margin of safety is cited at 95% and the favorable asymmetry gate is cleared at a 5.3-to-1 reward-to-risk ratio, providing meaningful compensation for the risks embedded in the cyclical setup. Price targets | The stock appreciates at least 20% over the next 12 months toward the analyst consensus range, as the market re-rates from cyclically depressed prices toward a more normalized earnings multiple as fears of a 92% earnings decline are partially resolved. | →Stable |
| CounterAnalyst consensus upside of 58% reflects wide uncertainty in a cyclical business; if earnings decline sharply as feared, analysts may dramatically revise targets downward, collapsing the apparent margin of safety before the stock reaches the current price target. | ||
Earnings are expected to decline approximately 92% as the airline cycle turns from its current peak — the gap between the trailing multiple near 1x and the forward price-to-earnings of 9.4x reflects the magnitude of anticipated earnings normalization; this cyclical reversal is the central bear case against the valuation argument and represents the primary scenario that would invalidate the margin of safety. Bear case | If forward earnings estimates stabilize or are revised upward over the next 2 quarters — rather than declining as severely as feared — the thesis gains substantial validation and the forward multiple compresses toward a more attractive range. | →Stable |
| CounterIf the ~92% earnings decline materializes on schedule, the apparent cheapness on trailing metrics dissolves; volume accumulation and positive momentum could reverse sharply if forward guidance disappoints expectations. | ||
The business converts 144% of its net income into free cash flow, meaning actual cash generation significantly exceeds what reported earnings indicate; this materially positive quality signal supports the balance sheet and provides a buffer even as reported earnings are expected to normalize. Quality breakdown | Free cash flow conversion remains above 100% of net income for 2 consecutive quarters, demonstrating that cash generation capacity is more resilient than the headline earnings trajectory suggests and that the company is not merely an accounting-earnings story. | →Stable |
| CounterFree cash flow at 144% of net income may reflect short-term working capital dynamics or one-time timing items; if earnings decline materially, the absolute cash flow level will shrink even if the conversion ratio temporarily holds. | ||
The stock shows positive price momentum with rising on-balance volume — consistent with institutional accumulation at current prices — and analyst sentiment is favorable with consensus implying approximately 58% upside; these supportive technical and sentiment factors complement the valuation case. Momentum breakdown | Momentum remains above the 7.5 level over the next quarter with on-balance volume continuing to rise, confirming that buyers are absorbing supply at current cyclically depressed prices and that the technical backdrop is not deteriorating. | →Stable |
| CounterThe technical chart pattern is described as unclear with mixed signals; a negative earnings surprise or a sharper-than-expected cycle reversal could rapidly unwind the momentum setup and lead to meaningful technical deterioration. | ||
At current prices, the stock offers 37% upside to the analyst price target, with analyst consensus implying approximately 58% upside from current levels; the margin of safety is cited at 95% and the favorable asymmetry gate is cleared at a 5.3-to-1 reward-to-risk ratio, providing meaningful compensation for the risks embedded in the cyclical setup.
→StablePrice targets
- Expectation
- The stock appreciates at least 20% over the next 12 months toward the analyst consensus range, as the market re-rates from cyclically depressed prices toward a more normalized earnings multiple as fears of a 92% earnings decline are partially resolved.
CounterAnalyst consensus upside of 58% reflects wide uncertainty in a cyclical business; if earnings decline sharply as feared, analysts may dramatically revise targets downward, collapsing the apparent margin of safety before the stock reaches the current price target.
Earnings are expected to decline approximately 92% as the airline cycle turns from its current peak — the gap between the trailing multiple near 1x and the forward price-to-earnings of 9.4x reflects the magnitude of anticipated earnings normalization; this cyclical reversal is the central bear case against the valuation argument and represents the primary scenario that would invalidate the margin of safety.
→StableBear case
- Expectation
- If forward earnings estimates stabilize or are revised upward over the next 2 quarters — rather than declining as severely as feared — the thesis gains substantial validation and the forward multiple compresses toward a more attractive range.
CounterIf the ~92% earnings decline materializes on schedule, the apparent cheapness on trailing metrics dissolves; volume accumulation and positive momentum could reverse sharply if forward guidance disappoints expectations.
The business converts 144% of its net income into free cash flow, meaning actual cash generation significantly exceeds what reported earnings indicate; this materially positive quality signal supports the balance sheet and provides a buffer even as reported earnings are expected to normalize.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% of net income for 2 consecutive quarters, demonstrating that cash generation capacity is more resilient than the headline earnings trajectory suggests and that the company is not merely an accounting-earnings story.
CounterFree cash flow at 144% of net income may reflect short-term working capital dynamics or one-time timing items; if earnings decline materially, the absolute cash flow level will shrink even if the conversion ratio temporarily holds.
The stock shows positive price momentum with rising on-balance volume — consistent with institutional accumulation at current prices — and analyst sentiment is favorable with consensus implying approximately 58% upside; these supportive technical and sentiment factors complement the valuation case.
→StableMomentum breakdown
- Expectation
- Momentum remains above the 7.5 level over the next quarter with on-balance volume continuing to rise, confirming that buyers are absorbing supply at current cyclically depressed prices and that the technical backdrop is not deteriorating.
CounterThe technical chart pattern is described as unclear with mixed signals; a negative earnings surprise or a sharper-than-expected cycle reversal could rapidly unwind the momentum setup and lead to meaningful technical deterioration.
Per-dimension breakdown
Quality
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 5.0 |
| Gross margin | 3.4 |
| Op margin | 4.1 |
| Net margin | 3.1 |
| Current ratio | 2.6 |
| FCF quality | 9.8 |
| Moat | 6.2 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 144% FCF/NI
Growth
2.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.8 |
| EPS growth | 0.0 |
Momentum
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.6 |
| MACD | 7.2 |
| OBV | 10.0 |
| MA position | 7.5 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.9 |
| Price target | 9.6 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (9.0) — signal dampened
- ▸Analyst upside: 54%
Insider
3.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.0 |
- ▸Modest insider selling — $1,451,465 (0.056% of mkt cap)
Peer rank
6.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.8 |
| quality rank | 5.0 |
| growth rank | 7.5 |
- ▸Attractive P/E vs peers
Technical
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.1 |
| support resistance | 4.1 |
| 52w position | 5.1 |
| gap | 5.0 |
Risk (lower is worse)
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.3 |
| days to cover | 5.8 |
| volatility | 1.6 |
| put call | 10.0 |
| implied vol | 0.0 |
- ▸High IV: 96%
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (8)
- MOMENTUM:5.7>=5.5
- ASYMMETRY:3.7>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:18d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (0)
none
Reward-to-Risk
3.69
Upside
+34.0%
Downside
9.2%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $2.6B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.7>=5.5. Top dim: Value at 9.4; weakest: Growth at 2.9. No conviction either direction.
The strongest dimensions are Value at 9.4, Sentiment at 7.3, and Catalyst at 7.0; the weakest are Growth at 2.9, Insider at 3.8, and Technical at 4.3. The V9 engine cleared all gates, producing an asymmetric reward-to-risk of 3.69 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1At current prices, the stock offers 37% upside to the analyst price target, with analyst consensus implying approximately 58% upside from current levels; the margin of safety is cited at 95% and the favorable asymmetry gate is cleared at a 5.3-to-1 reward-to-risk ratio, providing meaningful compensation for the risks embedded in the cyclical setup.
Trip ifUpside to analyst price target falls below 10%, indicating the margin of safety has materially compressed from the current 37%.
- P2The business converts 144% of its net income into free cash flow, meaning actual cash generation significantly exceeds what reported earnings indicate; this materially positive quality signal supports the balance sheet and provides a buffer even as reported earnings are expected to normalize.
Trip ifFree cash flow conversion falls below 80% of net income for 2 consecutive quarters.
- P3Earnings are expected to decline approximately 92% as the airline cycle turns from its current peak — the gap between the trailing multiple near 1x and the forward price-to-earnings of 9.4x reflects the magnitude of anticipated earnings normalization; this cyclical reversal is the central bear case against the valuation argument and represents the primary scenario that would invalidate the margin of safety.
Trip ifQuarterly EPS exceeds $1.00 for 2 consecutive quarters, indicating the feared ~92% earnings cycle reversal is not materializing at the severity assumed.
- P4The stock shows positive price momentum with rising on-balance volume — consistent with institutional accumulation at current prices — and analyst sentiment is favorable with consensus implying approximately 58% upside; these supportive technical and sentiment factors complement the valuation case.
Trip ifMomentum score falls below 5.5 for 2 consecutive months, indicating the bullish technical backdrop has broken down.