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American Airlines (AAL) Down 4.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for American Airlines (AAL - Free Report) . Shares have lost about 4.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Airlines due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
American Airlines Incurs Loss in Q3
American Airlines incurred a loss (excluding 83 cents from non-recurring items) of $5.54 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $5.62. However, the company delivered earnings per share of $1.42 in the year-ago quarter. Results in the third quarter were hurt by the coronavirus-induced air-travel demand woes.
Operating revenues of $3,173 million slumped 73.4% year over year but surpassed the Zacks Consensus Estimate of $2,800.8 million. Passenger revenues, which accounted for bulk of the top line (80.1%), plunged 76.9% to $2,540 million as well. Cargo revenues too declined marginally to $207 million, mainly due to 45.8% lower cargo ton miles. Other revenues also dropped 39.9%.
Total revenue per available seat mile (TRASM: a key measure of unit revenues) decreased 34.4% year over year to 10.31 cents in the reported quarter on a consolidated basis. Further, passenger revenue per available seat miles (PRASM) fell 43.1% to 8.25 cents in the period. Moreover, consolidated yield was down 17.3%.
While consolidated traffic (measured in revenue passenger miles) plummeted 72.1%, capacity (measured in average seat miles) contracted 59.4%. Consolidated load factor (percentage of seats filled by passengers) decreased 26.7 percentage points to 58.9% as traffic decline was more than capacity reduction.
Total operating costs (on a reported basis) declined 45.6% year over year to $6,044 million with expenses pertaining to aircraft fuel and related taxes tumbling 77.2%. However, consolidated operating costs per available seat mile (CASM: excluding fuel and special items) shot up more than 48% to 21.33 cents due to weak capacity. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 58.7%. Average fuel price per gallon (including related taxes) also declined 40.1% to $1.23.
Other Details
Driven by its cost-control initiatives, American Airlines’ average daily cash burn in the September quarter was $44 million per day, comparing favorably with the June-quarter’s figure of $58 million. Also, it exited the third quarter with available liquidity of $13.6 billion. The carrier expects cash burn rate to be approximately in the $25-$30 million range per day for the December quarter.
However, American Airlines expects system capacity for the December quarter to nosedive more than 50% on a year-over-year basis. Long-haul international capacity is estimated to be down approximately 75% year over year in the final quarter of the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -11.95% due to these changes.
VGM Scores
At this time, American Airlines has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise American Airlines has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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American Airlines (AAL) Down 4.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for American Airlines (AAL - Free Report) . Shares have lost about 4.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Airlines due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
American Airlines Incurs Loss in Q3
American Airlines incurred a loss (excluding 83 cents from non-recurring items) of $5.54 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $5.62. However, the company delivered earnings per share of $1.42 in the year-ago quarter. Results in the third quarter were hurt by the coronavirus-induced air-travel demand woes.
Operating revenues of $3,173 million slumped 73.4% year over year but surpassed the Zacks Consensus Estimate of $2,800.8 million. Passenger revenues, which accounted for bulk of the top line (80.1%), plunged 76.9% to $2,540 million as well. Cargo revenues too declined marginally to $207 million, mainly due to 45.8% lower cargo ton miles. Other revenues also dropped 39.9%.
Total revenue per available seat mile (TRASM: a key measure of unit revenues) decreased 34.4% year over year to 10.31 cents in the reported quarter on a consolidated basis. Further, passenger revenue per available seat miles (PRASM) fell 43.1% to 8.25 cents in the period. Moreover, consolidated yield was down 17.3%.
While consolidated traffic (measured in revenue passenger miles) plummeted 72.1%, capacity (measured in average seat miles) contracted 59.4%. Consolidated load factor (percentage of seats filled by passengers) decreased 26.7 percentage points to 58.9% as traffic decline was more than capacity reduction.
Total operating costs (on a reported basis) declined 45.6% year over year to $6,044 million with expenses pertaining to aircraft fuel and related taxes tumbling 77.2%. However, consolidated operating costs per available seat mile (CASM: excluding fuel and special items) shot up more than 48% to 21.33 cents due to weak capacity. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 58.7%. Average fuel price per gallon (including related taxes) also declined 40.1% to $1.23.
Other Details
Driven by its cost-control initiatives, American Airlines’ average daily cash burn in the September quarter was $44 million per day, comparing favorably with the June-quarter’s figure of $58 million. Also, it exited the third quarter with available liquidity of $13.6 billion. The carrier expects cash burn rate to be approximately in the $25-$30 million range per day for the December quarter.
However, American Airlines expects system capacity for the December quarter to nosedive more than 50% on a year-over-year basis. Long-haul international capacity is estimated to be down approximately 75% year over year in the final quarter of the year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -11.95% due to these changes.
VGM Scores
At this time, American Airlines has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise American Airlines has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.