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American Airlines (AAL) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
In the latest trading session, McDonald's (MCD) closed at $203.92, marking a -0.17% move from the previous day.

American Airlines (AAL) closed the most recent trading day at $31.80, moving -0.75% from the previous trading session. This move lagged the S&P 500's daily loss of 0.02%. Meanwhile, the Dow lost 0.03%, and the Nasdaq, a tech-heavy index, lost 0.21%.

Coming into today, shares of the world's largest airline had lost 1.29% in the past month. In that same time, the Transportation sector lost 2.57%, while the S&P 500 lost 1.4%.

Investors will be hoping for strength from AAL as it approaches its next earnings release, which is expected to be January 24, 2019. In that report, analysts expect AAL to post earnings of $1.07 per share. This would mark year-over-year growth of 12.63%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $11.06 billion, up 4.34% from the year-ago period.

It is also important to note the recent changes to analyst estimates for AAL. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.85% higher. AAL is currently a Zacks Rank #2 (Buy).

Investors should also note AAL's current valuation metrics, including its Forward P/E ratio of 5.66. This valuation marks a discount compared to its industry's average Forward P/E of 9.99.

Investors should also note that AAL has a PEG ratio of 0.74 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Transportation - Airline industry currently had an average PEG ratio of 0.44 as of yesterday's close.

The Transportation - Airline industry is part of the Transportation sector. This industry currently has a Zacks Industry Rank of 29, which puts it in the top 12% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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