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American Airlines Q4 Preview: Can Shares Take Flight?
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It’s the most critical time of the year for stocks – earnings season. Investors will remain busy sorting through quarterly results for some time, with plenty of companies unveiling what’s transpired behind closed doors.
We’ve received quarterly results from several notable companies, including titans Netflix (NFLX - Free Report) and Microsoft (MSFT - Free Report) .
And we’ve received results from several airliners, including Delta Air Lines (DAL - Free Report) .
Now, American Airlines (AAL - Free Report) is gearing up to unveil its quarterly results tomorrow on Thursday, January 26th, before the market open.
American Airlines, the largest airline internationally, provides passenger and cargo services. Currently, the company sports a favorable Zacks Rank #2 (Buy).
How does the company currently shape up? We can use quarterly results received from DAL as a small gauge.
Delta Air Lines Q4
Delta Air Lines posted better-than-expected results thanks to a continued recovery in travel demand, reporting EPS of $1.48, which exceeded our consensus estimate by more than 14.7%.
In addition, Delta generated roughly $13.4 billion in revenue throughout the period, more than enough to exceed the Zacks Consensus Sales estimate of $13 billion and reflecting a sizable 41% Y/Y increase. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Demand remained hot throughout the quarter, resulting in a 7% uptick in Domestic total passenger revenue compared to the December 2019 quarter. It’s worth noting that many airliners base their growth comps on pre-pandemic levels.
Further, operating cash flow totaled $1.2 billion, and the company made $285 million in payments on debt and finance lease obligations throughout the period.
Ed Bastian, CEO, on the results, “As we move into 2023, the industry backdrop for air travel remains favorable and Delta is well positioned to deliver significant earnings and free cash flow growth. We expect to grow 2023 revenue by 15 to 20 percent and improve unit costs year-over-year, supporting a full-year outlook for earnings of $5 to $6 per share and keeping us on track to achieve more than $7 of earnings per share in 2024.”
Delta Air Lines shares are up nearly 20% YTD.
American Airlines
Quarterly Estimates –
Analysts have taken a bullish stance on the company’s quarterly outlook, with six positive earnings estimate revisions hitting the tape over the last several months.
Look out – the Zacks Consensus EPS Estimate of $0.84 suggests an uptick of nearly 160% Y/Y.
Image Source: Zacks Investment Research
The company’s top line also looks to bounce back, with our $12.9 billion quarterly revenue estimate suggesting an improvement of nearly 40% Y/Y. Clearly, the recovery is in full swing.
Valuation –
Presently, AAL shares trade at a 0.2X forward price-to-sales ratio, beneath the 0.3X five-year median and Zacks Transportation sector average of 1.6X.
Image Source: Zacks Investment Research
Quarterly Performance –
American Airlines has primarily exceeded quarterly estimates, surpassing the Zacks Consensus EPS Estimate in three of its last four releases. In its latest release, the airliner beat earnings expectations by more than 25%.
Top-line results have also been positive, with AAL beating revenue estimates in six consecutive quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Putting Everything Together
Investors remain busy with earnings season, undoubtedly one of the most critical periods of the entire year for stocks.
And tomorrow, we’ll receive quarterly results from American Airlines (AAL - Free Report) . A peer, Delta Air Lines (DAL - Free Report) , has already reported quarterly results, exceeding estimates handily.
Analysts have been bullish for AAL’s quarter, with estimates suggesting a sizable recovery within earnings and revenue.
Further, the company has consistently beat expectations as of late, and the company’s forward price-to-sales-ratio remains below the five-year median.
Heading into the release, American Airlines is a Zacks Rank #2 (Buy) with an Earnings ESP Score of 9.8%.
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American Airlines Q4 Preview: Can Shares Take Flight?
It’s the most critical time of the year for stocks – earnings season. Investors will remain busy sorting through quarterly results for some time, with plenty of companies unveiling what’s transpired behind closed doors.
We’ve received quarterly results from several notable companies, including titans Netflix (NFLX - Free Report) and Microsoft (MSFT - Free Report) .
And we’ve received results from several airliners, including Delta Air Lines (DAL - Free Report) .
Now, American Airlines (AAL - Free Report) is gearing up to unveil its quarterly results tomorrow on Thursday, January 26th, before the market open.
American Airlines, the largest airline internationally, provides passenger and cargo services. Currently, the company sports a favorable Zacks Rank #2 (Buy).
How does the company currently shape up? We can use quarterly results received from DAL as a small gauge.
Delta Air Lines Q4
Delta Air Lines posted better-than-expected results thanks to a continued recovery in travel demand, reporting EPS of $1.48, which exceeded our consensus estimate by more than 14.7%.
In addition, Delta generated roughly $13.4 billion in revenue throughout the period, more than enough to exceed the Zacks Consensus Sales estimate of $13 billion and reflecting a sizable 41% Y/Y increase. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Demand remained hot throughout the quarter, resulting in a 7% uptick in Domestic total passenger revenue compared to the December 2019 quarter. It’s worth noting that many airliners base their growth comps on pre-pandemic levels.
Further, operating cash flow totaled $1.2 billion, and the company made $285 million in payments on debt and finance lease obligations throughout the period.
Ed Bastian, CEO, on the results, “As we move into 2023, the industry backdrop for air travel remains favorable and Delta is well positioned to deliver significant earnings and free cash flow growth. We expect to grow 2023 revenue by 15 to 20 percent and improve unit costs year-over-year, supporting a full-year outlook for earnings of $5 to $6 per share and keeping us on track to achieve more than $7 of earnings per share in 2024.”
Delta Air Lines shares are up nearly 20% YTD.
American Airlines
Quarterly Estimates –
Analysts have taken a bullish stance on the company’s quarterly outlook, with six positive earnings estimate revisions hitting the tape over the last several months.
Look out – the Zacks Consensus EPS Estimate of $0.84 suggests an uptick of nearly 160% Y/Y.
Image Source: Zacks Investment Research
The company’s top line also looks to bounce back, with our $12.9 billion quarterly revenue estimate suggesting an improvement of nearly 40% Y/Y. Clearly, the recovery is in full swing.
Valuation –
Presently, AAL shares trade at a 0.2X forward price-to-sales ratio, beneath the 0.3X five-year median and Zacks Transportation sector average of 1.6X.
Image Source: Zacks Investment Research
Quarterly Performance –
American Airlines has primarily exceeded quarterly estimates, surpassing the Zacks Consensus EPS Estimate in three of its last four releases. In its latest release, the airliner beat earnings expectations by more than 25%.
Top-line results have also been positive, with AAL beating revenue estimates in six consecutive quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Putting Everything Together
Investors remain busy with earnings season, undoubtedly one of the most critical periods of the entire year for stocks.
And tomorrow, we’ll receive quarterly results from American Airlines (AAL - Free Report) . A peer, Delta Air Lines (DAL - Free Report) , has already reported quarterly results, exceeding estimates handily.
Analysts have been bullish for AAL’s quarter, with estimates suggesting a sizable recovery within earnings and revenue.
Further, the company has consistently beat expectations as of late, and the company’s forward price-to-sales-ratio remains below the five-year median.
Heading into the release, American Airlines is a Zacks Rank #2 (Buy) with an Earnings ESP Score of 9.8%.