American Airlines (AAL) Stock Slides as Market Rises: Facts to Know Before You Trade

Zacks Equity Research
·3-min read

The latest trading session saw American Airlines (AAL) ending at $11.13, denoting a -0.27% adjustment from its last day's close. The stock's change was less than the S&P 500's daily gain of 0.09%. Meanwhile, the Dow lost 0.1%, and the Nasdaq, a tech-heavy index, added 0.16%.

Prior to today's trading, shares of the world's largest airline had lost 19.36% over the past month. This has lagged the Transportation sector's loss of 2.02% and the S&P 500's gain of 2.83% in that time.

Market participants will be closely following the financial results of American Airlines in its upcoming release. The company is expected to report EPS of $1.09, down 43.23% from the prior-year quarter. At the same time, our most recent consensus estimate is projecting a revenue of $14.49 billion, reflecting a 3.12% rise from the equivalent quarter last year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $2.05 per share and revenue of $55.02 billion, indicating changes of -22.64% and +4.23%, respectively, compared to the previous year.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for American Airlines. Such recent modifications usually signify the changing landscape of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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 20.12% lower. American Airlines is holding a Zacks Rank of #3 (Hold) right now.

In the context of valuation, American Airlines is at present trading with a Forward P/E ratio of 5.44. This represents a discount compared to its industry's average Forward P/E of 9.06.

Also, we should mention that AAL has a PEG ratio of 0.2. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. By the end of yesterday's trading, the Transportation - Airline industry had an average PEG ratio of 0.83.

The Transportation - Airline industry is part of the Transportation sector. At present, this industry carries a Zacks Industry Rank of 79, placing it within the top 32% of over 250 industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

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