Here's Why American Airlines (AAL) Fell More Than Broader Market
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American Airlines (AAL) closed the most recent trading day at $11.27, moving -1.31% from the previous trading session. The stock's change was less than the S&P 500's daily loss of 0.53%. At the same time, the Dow lost 0.26%, and the tech-heavy Nasdaq lost 0.83%.
Heading into today, shares of the world's largest airline had gained 8.14% over the past month, outpacing the Transportation sector's gain of 4.87% and the S&P 500's gain of 5.17% in that time.
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Market participants will be closely following the financial results of American Airlines in its upcoming release. On that day, American Airlines is projected to report earnings of $0.77 per share, which would represent a year-over-year decline of 29.36%. Meanwhile, the latest consensus estimate predicts the revenue to be $14.29 billion, indicating a 0.29% decrease compared to the same quarter of the previous year.
For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $0.81 per share and a revenue of $54.61 billion, representing changes of -58.67% and +0.74%, respectively, from the prior year.
Investors should also pay attention to any latest changes in analyst estimates for American Airlines. 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 reveals that these estimate alterations are directly linked with the stock price performance in the near future. 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.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 4.73% lower. American Airlines presently features a Zacks Rank of #5 (Strong Sell).
Digging into valuation, American Airlines currently has a Forward P/E ratio of 14.16. This expresses a premium compared to the average Forward P/E of 9.35 of its industry.
Investors should also note that AAL has a PEG ratio of 1.29 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AAL's industry had an average PEG ratio of 0.9 as of yesterday's close.