not wanting to cause bad feelings ,
it is my humble opinion that your post is an example of one side of the extremism we see on this board so frequently. An extremism that is not in touch with reality.
I am not making a comment about today's specific Ukraine situation, and how it will play out in the next few hours, but it should be such a clear common sense conclusion that with the realities that are existing in the world right now, that is not likely that AAL will reach your $50 prediction this year.
It would be great news if it can approach the old highs, given all the REAL headwinds existing and at risk of escalating.
Does that mean that the opposite extreme is what should be held to?
No, something in between is most likely .
One wonders why most people tend to extremes on these boards?
is it because they believe that it will help their long or short positions?
That is almost certainly a wrong idea as I can promise you that those who matter ( the big money ) who buy and sell the stocks do not care what is written on these boards.
So people, can we stop the ridiculous extremism and make this board what it should be, an information and idea sharing center with the intention of HELPING each other.
you are welcome, and thank you for your kind words. I agree with your sentiment . Wouldn't it be nice if we used this forum to help each other?
Of course now that you have complimented me, you will likely be accused of being an alias of me, just like the others have been accused.
You aren't me, are you? lol
Best wishes, keep being one of the honest, intelligent , balanced, fairminded board members.
let me compliment you on your polite behavior on this board. re "strong" demand
"strong" is a qualitative term, it is not a number. Parker could say that demand is "strong"
Does that mean that it is incorrect to say that demand has shown some signs of "softening" No.
Take the shareprice as an example. At $39, it is fair to say that the shareprice is "strong" in the manner that compared to a year ago ordec 2013 or jan 1 2014 it has moved up "strongly" reflecting the "strong" demand, and likewise compared to the major indices which are relatively much flatter in the respective time periods.
But then take a look at the shareprice vs the major averages since july 24. Clearly softer reflecting the softening demand. and the lowered guidance vs expectations. If any of the major's ceo's said "demand is weak", the stocks would be much lower.
So they say the demand is "strong" , but it LESS strong.
Speficially, AAL's official guidance for q3 was for a lower pretax margin in q3 than q2, and more recently in the aug8 release july traffic report, GUIDANCE for prasm for the 3Q , 1-3%, "strong" but not as strong as the slope of the recent past.
one also has to look at forward bookings and the affects we are seeing AS WELL as risks to further softening. I don't profess to know exactly what will happen, we will have to see, but clearly there are signs that a less euphoric phase is setting in.
bearsrun- no I am not short, AND I have not yet, nor am I telling or have any desire to influence people to sell their shares. Please do not tell lies & distort my communication.
Why do I post? a number of people on the board who have been in communication with me for many years , too many for me to answer individually. I answer their queries here in a composite manner.
TO ALL, can we agree to behave well and treat each other reasonably, fairly and generously?
I believe you are missing the comprehensive picture.
Oil is coming down because of the weakening outlook for the world economy. This macro fundamental will also decrease demand for air travel, ( in fact this is already happening if you look at the forward picture)
So what you are missing, is that net net, earnings estimates for 2015 are considerably too high, they will be coming down as the picture evolves.
It would be better for shareholders ( and the EPS) to pay a little more for fuel, if we could have the robust demand we have gotten spoiled on, but the stock price movement is starting to partially reflect the reality that the demand picture is softening. People who are not accepting that fact are in a state of denial of reality.
Some things don't seem to change,
one thing that has not is that this board follows the typical pattern found on yahoo finance, characterized by extremism and unkind feellings in the war between the extremists.
As I posted on earnings reporting day, the disappointing guidance and since then subsequent signs that what had been a bed of roses demand picture, was instead softening has resulted in what one should reasonably expect- a correction. After all AAL had been one of the absolute best performers, based upon an extremely rosy outlook devoid of significant negatives. So as reality has exerted itself and there are clearly negatives and real risks, it is only natural that we should have a correction.
But what then?
does it mean that the stock must have to give up all its gains and return to $25 or even $30. No not necessarily.
Nor would a rebound from an oversold condition mean that we are going back up to the highs.
This board would have you believe that it has to be one or the other, but the reality is, based upon the real world fundamentals and technical conditions, that something in between is the most likely.
So my view is that the correction we are seeing is appropriate and reasonable based on the fundamentals ,,and the technical picture is considerably damaged such that there will be much more resistance to the rallies than we saw in the prior periods this year. There will likely be a sell the rally mentality for quite some time. As part of that, the soporific rise had attracted a set of shareholders, ie momentum players who will not be easily redrawn back into the AAL arena. Thus, as I noted on earnings report day, everything that AAL does on the upside will be need to be shown, they will not get the benefit of the doubt. Big gains in the stock will be harder than before.
I am sorry you do not understand my communication and instead have seemingly chosen to attempt to distort my intent or manipulate me in some manner.
I wish you well, but do not wish to engage in an interchange started in that manner.
I think you are confusing the context of my post. I was not trying to establish a positive OR negative slant to the concept of the GAAP vs non GAAP earnings. The point is that it is clear to me that one cannot rightly harp on the valuation issue of AAL by pointing to the P/E ratio when the E is affected by so many adjustments. And add to that the absolute fact that currently AAL is not paying fed income tax , because of NOL carryforwards , which (we hope) will eventually be exhausted and result in a hit to future normalized earnings, it makes the argument of buy AAL because of the P/E , not valid.
That was my point.
It is my considered view, after many decades in this business, that amateurs wrongly believe that professionals have no clue how to value a company. Stocks trade where they do for good reason, more than they don't. Yes, there are inefficiences , but not as much as people think.
There are plenty of realistic challenges as well as risks to AAL , and the market is acting reasonably and validly to pause at this point. and I do believe that AAL will have to prove to the market it can continue the story over time, in the face of those realities and risks. I have found over many decades that unrealistic extremes in either direction prove to be faulty.
AAL made an unsustainable move since last dec, it is easy to see why we got spoiled by it, and this corrective period is reasonable , imo. I would say it is needed , as well.
The people who got overexhuberant, and especially who are time dated, ie can only hold their stock for a short time or worse , bought upside call options that will expire in six months won't be happy with this rational and needed and corrective phase , but that is just the way things are.
one might think it is surprising that others have not discussed this on the board.
It is not hard to find.
Go to the SEC 10Q filing See page 17.
The figure is in plain black aend white , $1.17 a share , of course much less than the headline Non Gaap figure of $1.98 a share. There are many other aspects to discuss, including the NOL's but the crowd here do not seem to be that interested, but they should.
his 2014 full year estimate went from $6.01 to $5.61. It is significant because , as you noted, he has been clearly the biggest bull on the street AAL
And you thought wrong, I did NOT state he would downgrade the rating on the stock, at this time HOWEVER, seeing that he just downgraded ALK, if , for whatever reason, and there are many possible, AAL outlook softens, he would eventually do so.
I think the psychology of when the biggest supporter on the street softens his view, even slightly , it takes some of the appeal of buying the stock, at least at any price, away.
My own view is that while I still see shareprice potential upside for AAL, but as I have noted before, I think it is going to be more moderate and harder to accomplish than before. , ie the easy money on AAL has been made. Now that significant and more reasonable doubt has been introduced, AAL will have to prove for many quarters that it can live up to expectations.
I also believe from decades of experience in this game, that you are making an error in focusing on the P/E so much. Experience teaches that stocks that trade with a low P/E do so for appropriate reasons. One thing you are missing is that the quality of AAL earnings have some factors or questions to take into account. One , they are reporting on a non GAAP basis , which is inflating the earnings. Secondly because of NOL's they are not paying federal corporate income tax. Eventually that will run out, and the market has to figure the sharprice on the longer term earnings model, which will take a hit when the NOL's run out.
Jamie Baker, JP Morgan analyst, raised estimates and overall RATING on UAL.
Unfortunately for AAL, noting the increased headwinds, he decreased earnings estimates and price target.
For ALK, he decreased estimates, price target and rating.
Last thursday in the wake of the earnings release and forward guidance by the company, I stated that because of the disappointing pretax margin guidance for the third quarter, that Jamie Baker, the JPMorganchase analyst , who has been the most bullish of the analyst community on AAL, (by most bullish I mean highest earnings estimates and price targets) would likely reduce his earnings estimates for AAL. Late last night , he did as I predicted, dropping his street high third quarter estimate of $2.11 to $1.89, and his fourth quarter estimate from $1.32 to $1.14. He also slightly decreased his 2016 estimates and his price target for the stock, maintaining his overweight rating.
Interestingly , in the same note, he raised estimates and rating for UAL, and estimates for JBLU. He also downgraded rating and estimates for ALK.
On the AAL decreased estimates, Yahoo finance has not yet incorporated his ( and probably some other analyst) estimates , but will do so as it filters through their system.
while I am on record that I see potential in shareprice appreciation for AAL in the intermediate term, I do not share your view of focusing mainly on P/E.
It is a common error , particularly among amateurs to believe that a stock is undervalued strictly because it trades with a low P/E.
My experience is that stocks trade with a low P/E for justified reasons more often than not.
I would note that there are plenty of risks to the analyst estimates , especially the farther out you get in time. Nothing is automatic or guaranteed.
And it would not take a signficant terror attack (which we are certainly at risk of) for it to happen
ie One ebola case in a western country could reduce travel and earnings in a very short time.
Airlines are a very risky business with the added negative of being highly capital intensive and subject to a myriad of different and varied risk types.
It is reasonable for them to trade with low P/E ratios.
those familiar with me, know that I want to avoid angst that all too often dominates these boards, and so I hold out the olive leaf of peace to you . However I do ask that you reconsider the false &misleading statements you have made about me/ or my posts of late.
1. I do not just show up when the" stock is down etc." as you wrote. I think it is fair to state that I have been consistently bullish on AAL for quite some time, albeit I am not one given to unbridled euphoria & extremes (either way) as I have also communicated.
2. I did not say that there would be downgrades of the stock. Re Jamie Baker , the comments I made refer to the fact that he has had the most bullish and highest earnings estimates for AAL. I know for a fact that he had been modelling a much higher pre tax margin estimate for the 3Q, and as a result of the recent disclosure I expect him to adjust down his estimates for the same metric and naturally for EPS for the 3Q. I expect to see that happen this next week in a note from him , covering his AAL views as well as other airlines. That is what I was communicating, nothing else.
( I should note that there are some analysts who were estimating even lower margins than guidance and they will likely raise them a bit ).
In general, (and this may be what you have detected in my posts and is what you don't like), there is some indication that the euphoria surrounding AAL stock has moderated, and I don't see that as unreasonable. I think the slope of performance is also moderating, and is reasonable. I share your view that if AAL can put the numbers up, quarter after quarter, that slowly p/e metrics can improve. But given the history and realities of risk along with shots fired across the bow of late, I believe AAL will not be given the benefit of doubt, it wil have to prove it first.
I am speaking about the pretax margin guidance for the third quarter , which is 10.5 to 12.5.
I think you misheard them , they did not say that is higher than previous guidance ( as today was the first time third quarter margin guidance has been given).
What they said it is better than a full year ago margins, but remember where the stock was a year and a quarter ago, It is also below the second quarter margins just completed. Some of the bullish analysts, like Jamie Baker had been modelling 13.6 margin for the third quarter. Obviously people like him will be cutting their earnings estimates.
right, compare that to some of the more bullish analyst expectations and you can see it is obviously a disappointment.
did you here Jamie Baker's questions?
he is the biggest bull on wall street for aal, and from his tone, I expect that to change.
Good thing they initiated the buyback and dividend, otherwise AAL could be lower today
there were two 8k's filed today, you must be looking at the wrong one.
Just find the 8k (second one on the list) which has "investor update".
for those wondering why the stock is not strong today, despite the good news of earlier than expected shareholder friendly moves of dividend and share buyback, the key metric that I can see weighing on the shares today is the disappointing forward guidance for third quarter margins, well below the now completed 2nd quarter.
It is not in the earnings press release, but in an 8k filing today.
Much is being made about Yellen's comments .
My understanding is that she has
1. made comment that some areas of the equity market, specifically biotech and social media have "strectched valuations
2. she says that is NOT the case with the general market.
My comment, clearly AAL does not fall in the stretched valuation portion , as its valuation is even much more conservative than the general market. It would not be out of line to state that AAL falls in a third category, of potentially undervalued securities.
Time and facts on the ground , ie good earnings and other shareholder value enhancing factors will straighten things out.
one has to chuckle at the short seller who in recent days saying that if AAL had any good news they would have reported it already.
Doug Parker knows how to run this company, and it is only a matter of time, not if, that fair value for the shares will be realized, and that fair value is HIGHER.
Remember that because of the old American airlines , prior to its merger with Doug Parker's USAIR, has net operating loss tax carryforwards, AAL can and will use them, thus hugely reducing taxes. So AAL 's big profits will go straight to the bottom line, and therefore straight to shareholder equity.
Future is very bright , and this is just the beginning of good news.
It is so typical, and imho WRONG to see extremism and dishonesty to dominate these boards.
I recently posted that those who posted it was going to be "easy" to go to $55 were out of touch with the realities . Those now calling for extreme downside are just as out of touch with reality.
And I note that these latest extremists have no conscience, using any lie or distortion to try and scare people.
One poster stated that if there was anything potentially good to report for june traffic that AAL would have already done so, stating that aal routine releases traffic data by the third business day of the month which is NOT TRUE. Those that have taken the time to consult with the company KNOW that AAL is scheduled and has been scheduled for a considerable period of time, to release june traffic data ON JULY 9th, that is tomorrow. Anyone telling you differently is lying or spreading falsehood. You can fill in your own reasons as to why they are doing that. (outright dishonesty or intellectual dishonesty to try to manipulate others through fear is my opinion)
While I don't believe that AAL is going to $70 anytime soon, or even $55 in the short term, I do believe that tomorrow AAL will report June traffic and it will meet their previous guidance which are very good fundamentals and which fly in the face of the recent shareprice action. So while I am not of the opinion that $55 in the short term is in order, if one looks out t 18 months, $55 is more likely than $30.
I still see catalysts for upside in the shares, such as shareholder friendly moves to return capital to shareholders, through dividends and share buybacks. I believe that AAL will eventually be added to the S&P 500 index which will boost the ownership of the shares and the shareprice. I believe that AAL has the best managment in the industry and that AAL represents the best value in the sector