It's been nearly five years since the start of the pandemic, and while most economies, companies and share prices are back to normal, Air Canada (TSX:AC) stock continues to trade more than 50% down from its pre-pandemic price.

Despite the travel industry recovering and setting new records, and Air Canada consistently growing its sales and setting record revenue itself, the stock continues to trade in the low $20 range, well below its pre-pandemic price of more than $50.

So, what's stopping Air Canada from seeing a full recovery, and is it worth buying while it continues to trade below $25?

Why is Air Canada stock still trading undervalued?

Although the pandemic and its impact on the economy are well in the rearview now, for some stocks like Air Canada, the negative impacts are still lingering.

The airline industry is highly competitive, with companies constantly looking for ways to optimize and stay profitable. Planes only make money when they're in the air, so airlines focus heavily on minimizing ground time and maximizing operational efficiency.

Therefore, when the pandemic brought almost all travel to a halt, and planes sat idles at airports for over a year, companies like Air Canada were losing massive sums of money. In fact, from the end of 2019 to the end of 2021, Air Canada stock's net debt increased from $3.35 billion to more than $7.7 billion, an increase of roughly 130%, just to stay in business.

Therefore, although it's now generating record sales and earnings before interest, taxes, depreciation, and amortization (EBITDA) as the travel industry has recovered, its significant debt load continues to weigh on its valuation.

The massive debt not only increases the risk of the investment, but with interest rates elevated lately, it's also increased interest expenses, which has impacted its margins negatively.

With that said, though, in the last two years, as Air Canada has rapidly recovered, it's begun to pay down much of that debt, which is ultimately bringing it closer to its eventual recovery.

Therefore, although the stock has been undervalued for years now in comparison to its pre-pandemic price, Air Canada could finally turn the corner this year as its debt continues to be reduced and its profitability improves.

Is the airliner worth investing in today?

With Air Canada trading at just under $22 today, the stock certainly seems compelling. Not only does it have limited downside risk since it already trades so cheaply, but as interest rates continue to fall, Air Canada stock could begin to gain significant momentum.

It's also worth noting that at these prices, Air Canada trades at a forward enterprise value (EV)-to-EBITDA ratio of just 3.2 times. That's not just ultra-cheap for any stock, but it's also right in line with Air Canada's three-year average EV/EBITDA ratio heading into the pandemic.

In addition, of the 13 analysts that currently cover Air Canada stock, 11 are giving it a buy rating with the other two rating it a hold. Furthermore, its average analyst target price is currently sitting upwards of $28, which is a more than 25% premium to where Air Canada stock trades today.

Therefore, although it's difficult to predict when exactly the stock could gain momentum and begin to rally, it's hard to ignore the value that the airliner offers investors today.

So, if you've got Air Canada stock on your watchlist and are expecting a significant recovery, you may want to consider buying the stock sooner rather than later before it takes off and leaves today's undervalued price behind.