Here’s what could be in store for the IAG share price in May

Jon Smith explains why May could be a big month for the IAG share price and shares reasons why he believes the stock is undervalued.

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Image source: International Airlines Group

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April was a fairly quiet month for International Consolidated Airline Group (LSE:IAG) shares. After the release of the 2023 results back in February, investors had little to chew over in April. Yet up ahead in May we have the Q1 results, along with some other key events that could influence the IAG share price much more. Here’s the lowdown.

Upcoming earnings

The big event to plan for is the Q1 results, due out on 10 May. The key thing I’m watching out for is confirmation that the momentum from 2023 is still being carried over. In the full-year results, profit before tax surged to just over €3bn, 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 woes of the pandemic behind it. For 2024, the report noted that “demand continues to be robust”. Further, the firm was “92% booked for Q1 2024 and 62% booked for H1 2024”.

This lines up 2024 to be a strong year, but investors will be keen to see if the Q1 results back this up. One concern is if consumers are feeling the pinch with the cost-of-living crisis still lingering. Should demand fall based on this, it could cause the IAG share price to have a wobble.

Risk in the Middle East

Another ongoing situation to watch out for is the conflict in the Middle East. May could be a crunch month, with calls for a cease fire to prevent further escalation.

This impacts IAG, because the firm flies to different locations in the Middle East, both for commercial and cargo purposes. Although it hasn’t stated any impact thus far, there are signs that it could be hampering business. For example, I noted recent figures out from competitor easyJet.

A couple of weeks back, easyJet reported £40m worth of cancellations and £40m worth of lost bookings for flights to the region.

We’ll have to wait and see how things play out over the next couple of weeks. Yet it clearly has the potential to impact IAG shares.

An undervalued stock for the watchlist

When I look past the next month, I see good potential for the stock to move higher in coming years. Of course, this is dependent on successfully navigating the events in May! Yet if we assume that it’s all positive, I’d definitely consider adding the stock to my portfolio.

I feel some investors are still ignoring the stock as they feel it’s still caught under the pandemic cloud. Recent results show that’s clearly not the case. Yet with a price-to-earnings ratio of just 4, it’s undervalued in my book.

The risk is that it stays undervalued for a long time, as investors can be slow to change their view on a company. Yet as we saw with Rolls-Royce over the past year, once an undervalued stock starts to rally, it can really surge.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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