Value
9.3/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 10.0 |
| P/S | 10.0 |
| EV/EBITDA | 8.3 |
| Fwd P/E | 9.5 |
| Analyst target | 9.0 |
- ▸Forward P/E: 8.7x
- ▸Attractively valued
AERO · Why this verdict
Why Grupo Aeromexico (AERO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Aeromexico is a cheap airline (forward P/E 8.7x) with excellent cash conversion and 50.1% upside to the $22.76 analyst target, but earnings are expected to fall about 82% from a cyclical peak, results swing widely, and the shares are in a confirmed downtrend.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A forward P/E of 8.7x already discounts expected earnings falling about 82%, and the analyst view shows a 94% margin of safety. Bear case | Forward P/E stays below 12x as earnings normalize rather than collapse. | ↑Improving |
| CounterThe forward P/E of 9x versus trailing 2x is a cyclical-trap pattern: earnings are peaking, so the low multiple may be an illusion. | ||
Cash conversion is excellent at 358% FCF to net income, with a Piotroski F-Score of 6.7 out of 10. Quality breakdown | FCF to net income stays above 150% as the airline keeps generating cash. | →Stable |
| CounterNet margin scores only 1.3 and operating margin 4.5, so strong cash conversion rests on a very small earnings base. | ||
Earnings results swing widely: 2 beats and 2 misses over the last four reports, ranging from +202.09% in April 2026 to -92.98% in July 2026. Avg surprise pct | EPS lands at or above estimates in the next two reports, narrowing the swings. | ↓Deteriorating |
| CounterThe latest report was a small beat (+3.83%), but July 2026 turned a -$0.21 estimate into a -$0.40 loss. | ||
At $15.16 the stock is 50.1% below the $22.76 analyst target, with reward-to-risk of 4.6. Analyst target | Price moves toward the $22.76 target as earnings hold up. | →Stable |
| CounterAnalyst coverage is light and the target assumes earnings do not follow the expected ~82% decline. | ||
The stock is in a confirmed downtrend: below the 200-day average with a -3.9% 30-day slope and falling on-balance volume, with momentum at 2.4/10. Momentum breakdown | Momentum recovers above 4.5/10 and price reclaims the 200-day average. | ↑Improving |
| CounterInsiders were net buyers of 2 transactions worth $221,881 against one $562,915 sale, and a low put/call ratio of 0.57 shows no heavy bearish positioning. | ||
A forward P/E of 8.7x already discounts expected earnings falling about 82%, and the analyst view shows a 94% margin of safety.
↑ImprovingBear case
- Expectation
- Forward P/E stays below 12x as earnings normalize rather than collapse.
CounterThe forward P/E of 9x versus trailing 2x is a cyclical-trap pattern: earnings are peaking, so the low multiple may be an illusion.
Cash conversion is excellent at 358% FCF to net income, with a Piotroski F-Score of 6.7 out of 10.
→StableQuality breakdown
- Expectation
- FCF to net income stays above 150% as the airline keeps generating cash.
CounterNet margin scores only 1.3 and operating margin 4.5, so strong cash conversion rests on a very small earnings base.
Earnings results swing widely: 2 beats and 2 misses over the last four reports, ranging from +202.09% in April 2026 to -92.98% in July 2026.
↓DeterioratingAvg surprise pct
- Expectation
- EPS lands at or above estimates in the next two reports, narrowing the swings.
CounterThe latest report was a small beat (+3.83%), but July 2026 turned a -$0.21 estimate into a -$0.40 loss.
At $15.16 the stock is 50.1% below the $22.76 analyst target, with reward-to-risk of 4.6.
→StableAnalyst target
- Expectation
- Price moves toward the $22.76 target as earnings hold up.
CounterAnalyst coverage is light and the target assumes earnings do not follow the expected ~82% decline.
The stock is in a confirmed downtrend: below the 200-day average with a -3.9% 30-day slope and falling on-balance volume, with momentum at 2.4/10.
↑ImprovingMomentum breakdown
- Expectation
- Momentum recovers above 4.5/10 and price reclaims the 200-day average.
CounterInsiders were net buyers of 2 transactions worth $221,881 against one $562,915 sale, and a low put/call ratio of 0.57 shows no heavy bearish positioning.
Per-dimension breakdown
Quality
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 3.5 |
| Gross margin | 2.3 |
| Op margin | 4.5 |
| Net margin | 1.3 |
| Current ratio | 2.5 |
| FCF quality | 10.0 |
| Moat | 5.5 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 358% FCF/NI
Growth
3.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.9 |
| EPS growth | 0.0 |
Momentum
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 2.1 |
| OBV | 10.0 |
| MA position | 1.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -4.2%/30d — confirmed downtrend
Sentiment
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.7 |
| Analyst rating | 6.9 |
| Price target | 9.9 |
- ▸LLM news sentiment: +0.34 (n=3)
- ▸Light analyst coverage (9.0) — signal dampened
- ▸Analyst upside: 72%
Insider
5.3/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.6 |
- ▸Insider selling (low materiality) — $441,023 (0.019% of mkt cap)
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.9 |
| quality rank | 3.8 |
| growth rank | 1.9 |
- ▸Attractive P/E vs peers
Technical
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.3 |
| support resistance | 5.5 |
| 52w position | 3.2 |
| gap | 5.0 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.2 |
| days to cover | 7.4 |
| volatility | 0.0 |
| put call | 9.5 |
| implied vol | 2.8 |
| news risk | 6.0 |
- ▸High IV: 63%
Catalyst
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 9.2 |
| news activity | 7.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- ASYMMETRY:4.8>=1.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:103d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.5<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
4.80
Upside
+49.5%
Downside
10.3%
Sizing output
AVOID
SetupRange Bound — RSI 47 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $2.4B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 9.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.5<4.5, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 4.80 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 9.3, Sentiment at 7.7, and Catalyst at 5.9; the weakest are Growth at 3.0, Momentum at 3.5, and Peer rank at 4.4. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 4.80 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Strong Cash Conversion
Trip ifFCF to net income falls below 100% from the current 358%.
- P2Valuation Discounts Earnings Decline
Trip ifForward P/E rises above 15x from the current 8.7x.
- P3Volatile Earnings Surprises
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P4Analyst Target Upside
Trip ifAnalyst target falls below $17 from the current $22.76.
- P5Confirmed Downtrend
Trip ifMomentum score rises above 4.5/10 from the current 2.4.