Based on American Airlines Group Inc’s (NASDAQ:AAL) earnings update in June 2018, the consensus outlook from analysts appear highly confident, as a 52.4% rise in profits is expected in the upcoming year, compared with the previous 5-year average growth rate of 37.7%. Presently, with latest-twelve-month earnings at US$1.47b, we should see this growing to US$2.24b by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for American Airlines Group in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is American Airlines Group going to perform in the near future?
The view from 13 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of AAL’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2021, AAL’s earnings should reach US$3.70b, from current levels of US$1.92b, resulting in an annual growth rate of 17.7%. This leads to an EPS of $6.71 in the final year of projections relative to the current EPS of $3.92. Earnings growth appears to be a result of cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, AAL’s profit margin will have expanded from 4.5% to 7.8%.
Future outlook is only one aspect when you’re building an investment case for a stock. For American Airlines Group, I’ve put together three fundamental factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is American Airlines Group worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether American Airlines Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of American Airlines Group? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.