Wizz Air Holdings (LSE: WIZZ) dipped sharply on Thursday (5 June) after the FTSE 250 airline posted a 62% full-year operating profit fall. The shares have lost half their value in the past 12 months, and two-thirds over five years.
But is Wizz in the bargain basement of airline sector stocks now? It just might be.
One-off factor
The profit hit came mainly from issues over new Pratt & Whitney engines, which grounded a number of planes. And the company suspended its 2026 guidance. So there’s clearly a fair bit of risk here, in a sector that’s already inherently risky.
But the Wizz Air share price weakness has worked wonders for valuation. Forecasts put the 2026 price-to-earnings (P/E) ratio down at just 5.4, and dropping even lower to 4.2 by 2027.
I see no reason to think analysts will need to downgrade forecasts in any real way. Current bookings are good. And the company expects significant rises this year in revenue and capacity, coupled with lower costs.
Cheapest of the bunch?
That P/E is lower than at easyJet‘s 6.8 predicted for 2027. And it’s even a bit below the 5.2 at International Consolidated Airlines whose longer-haul operations have been suffering. And Wizz Air has much stronger earnings growth forecast than either of those.
I’ll give it a miss myself because the sector just don’t fit my strategy. But I reckon those who invest in airlines could do well to consider buying Wizz while it’s down.
Investing platform
The CMC Markets (LSE: CMCX) share price dipped the same day, on full-year results. That’s even though the annual dividend rose 37%. The company, which provides online trading and investing services, saw underlying EBITDA grow 12% with profit before tax up 33%.
But we did see revenue excluding interest income fall 2.3%. The 2024 share price recovery seems to have gone off the boil again.
Too low?
Again, this is one where I think the weak share price performance could be out of line with forecasts and the valuation they imply.
To be fair, in the latest update the company did speak of weakening interest income and a “softer near-term outlook“. And maybe we’ll see forecasts for the next two years scaled back a bit.
But analysts currently see earnings per share rising 12% over the next two years, providing two-times cover for the predicted progressive dividends. Even if that might now be a bit optimistic, I still see enough safety margin in P/E multiples of only a bit over nine to cover it.
And this is a company with net cash on the books, of £248m at 31 March, and forecast to improve further by 2027.
Crypto risk?
CMC’s cryptocurrency trading service is popular and can be profitable. But might it lose some attraction if today’s excitement should cool? And as economies settle, interest rates fall, and more investors head back to long-term stock markets, short-term trading could also slow.
But on today’s valuation, I really think this could be a good time to consider getting in.
