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It hasn't been the best quarter for American Airlines Group Inc. (NASDAQ:AAL) shareholders, since the share price has fallen 15% in that time. But looking back over the last year, the returns have actually been rather pleasing! After all, the share price is up a market-beating 49% in that time.
Although American Airlines Group has shed US$764m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
American Airlines Group wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
American Airlines Group actually shrunk its revenue over the last year, with a reduction of 44%. Despite the lack of revenue growth, the stock has returned a solid 49% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
American Airlines Group is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think American Airlines Group will earn in the future (free analyst consensus estimates)
A Different Perspective
It's good to see that American Airlines Group has rewarded shareholders with a total shareholder return of 49% in the last twelve months. That certainly beats the loss of about 8% per year over the last half decade. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. It's always interesting to track share price performance over the longer term. But to understand American Airlines Group better, we need to consider many other factors. Take risks, for example - American Airlines Group has 4 warning signs (and 2 which are concerning) we think you should know about.
Of course American Airlines Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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