The IAG (LSE: IAG) share price is at a ridiculously low stage, I really feel. With a price-to-earnings ratio of simply 3.96, this is among the least expensive shares on all the FTSE 100.

The British Airways-owner took a beating within the pandemic as fleets had been grounded. And its shares are nonetheless caught on the runway because the world begins flying once more.

IAG’s poor efficiency is much more shocking provided that it posted a “strong” first half on 2 August, with gross sales climbing 8.4% to €14.7bn. Revenue earlier than tax dipped 1.1% to €905m however comfortably beat estimates.

The inventory pays dividends once more

IAG’s core North Atlantic, Latin America and intra-Europe markets are doing properly, with revenues up 7.8% to €8.3bn. Higher nonetheless, the board introduced it was resuming dividends as free money move surged to €3.2bn.

The shares rose 3% that morning however have idled since. Buyers who thought they’d noticed a discount may have been dissatisfied. IAG shares are up simply 3.93% in 12 months.

That appears harsh to me. Visitors and revenues are rising, albeit a bit of bumpily, whereas gasoline costs are falling. Wages at the moment are rising sooner than inflation which ought to put cash into prospects’ pockets. But nonetheless traders stay cautious of IAG.

The airline sector is inherently unstable and Center East tensions and potential US recession have additional deterred patrons. Additionally, IAG nonetheless carries internet debt of €9.25bn, albeit down from €10.39bn in 2022. Maybe that’s holding it again.

However it’s a sunnier image at AIM-listed price range service Jet2 (LSE: JET2), whose shares are up 18.99% over one yr and 88.5% over 5. They nonetheless look good worth although, buying and selling at a modest P/E of seven.32 instances earnings.

On 11 July, it posted a 9% improve in full-year working revenue to £428.2m, whereas income grew 24% to £6.3bn amid file passenger numbers. Margins rose too.

It presents development

It is a smaller operation, with a market cap of £2.93bn in comparison with IAG’s £8.42bn. Arguably, that offers it extra scope for development. Jet2 takes supply of 146 new plane from Airbus over the following decade. Whereas some are straight replacements, its fleet will improve from in the present day’s 127.

Like IAG, its low valuation means that traders stay sceptical. Nevertheless, internet debt is scarcely a priority right here. After excluding advance buyer deposits, it totals simply £124m. Money reserves of £484.4m are up greater than 50% in a yr.

Jet2 resumed dividends in 2023, suggesting a stronger stability sheet than IAG. In 2023, Jet2’s board hiked the full-year dividend by a 3rd, from 11p to 14.7p per share. Let’s see what the chart says.

Chart by TradingView

The dividend yield is disappointingly low at 1.1%. Nevertheless, it’s coated 12.6 instances by earnings, giving room to develop. Clearly, I’ve to count on there might be quite a lot of volatility concerned on this inventory, so it’s not with out danger. Airways have excessive mounted prices whereas passenger demand is weak to shocks, whether or not political, navy, financial or volcanic. As we’ve seen with the pandemic, they don’t bounce again in a single day.

I’m tempted by IAG however a bit of cautious of falling right into a FTSE 100 worth lure. As a substitute, I’ll purchase Jet2 when I’ve the money.