Is the AA share price (LON:AA) cheap at 67p?

AA (LON:AA.) is an historic association founded in 1905, which provides car insurance, driving lessons, breakdown cover, loans, motoring advice, road maps and other services. Recently, the group has stumbled and is today actually classified as a mid cap,  a mid cap despite generating sales of £979m. 

This is in part due to balance sheet health - the company has a pension deficit and carries some £2.705bn of net debt on its books - and recent trading - for the fiscal year ended 31 January 2019, AA PLC revenues increased 2% to £979m but net income decreased 62% to £42m.

Right now the AA share price displays favourable value traits, however, as evidenced by its Value Rank of 90. Let's explore this in more detail.

Breaking down AA's Value Rank

We can see by using AA's StockReport that the group has a:

• Trailing twelve month price to earnings ratio of 5.73
• Trailing twelve month price to free cashflow of 2.36
• Rolling dividend yield of 2.96%
• Trailing twelve-month price to sales ratio of 0.42

This combination of financial traits suggests that AA stock might be good value at current levels, although further research is required if this is to be confirmed.

What does this mean for potential investors?

Some of the best quality stocks in the market have defensible models that can deliver high levels of shareholder returns over the long term. But there are no guarantees and it's important to do your own research. Indeed, we've identified some areas of concern with Aa that you can find out about here.