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American Airlines (AAL) Gains But Lags Market: What You Should Know

Zacks Equity Research

American Airlines (AAL) closed the most recent trading day at $27.38, moving +0.33% from the previous trading session. The stock lagged the S&P 500's daily gain of 0.63%. Meanwhile, the Dow gained 0.53%, and the Nasdaq, a tech-heavy index, added 0.54%.

Heading into today, shares of the world's largest airline had lost 12.48% over the past month, lagging the Transportation sector's loss of 2.1% and the S&P 500's gain of 1.07% in that time.

AAL will be looking to display strength as it nears its next earnings release. On that day, AAL is projected to report earnings of $1.25 per share, which would represent year-over-year growth of 20.19%. Our most recent consensus estimate is calling for quarterly revenue of $11.36 billion, up 3.83% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.99 per share and revenue of $45.81 billion. These totals would mark changes of +9.67% and +2.85%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for AAL. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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. The Zacks Consensus EPS estimate has moved 0.3% higher within the past month. AAL is currently a Zacks Rank #3 (Hold).

Looking at its valuation, AAL is holding a Forward P/E ratio of 5.47. Its industry sports an average Forward P/E of 9.14, so we one might conclude that AAL is trading at a discount comparatively.

We can also see that AAL currently has a PEG ratio of 1.79. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. AAL's industry had an average PEG ratio of 0.63 as of yesterday's close.

The Transportation - Airline industry is part of the Transportation sector. This group has a Zacks Industry Rank of 67, putting it in the top 27% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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