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Here's Why You May Bet on American Airlines (AAL) Stock Now
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American Airlines (AAL - Free Report) is benefiting from an uptick in air-travel demand. An upsurge in passenger volumes makes the AAL stock an attractive investment opportunity currently.
Let’s delve deep to unearth the factors working in favor of the Zacks Rank #2 (Buy) stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter and current-year earnings has been revised 7.2% and 15.8% upward over the past 60 days, respectively. Such favorable estimate revisions reflect brokers’ confidence in the stock.
Given the wealth of information at the brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because it serves as a key indicator in determining the price of a stock.
Buoyant Air-Travel Demand: Improved air-travel demand, particularly on the domestic front, is aiding American Airlines. Passenger revenues, which account for the bulk of the top line, have been very strong. Recently, management lifted earnings per share forecast for 2023, primarily driven by the rosy scenario.
The company now expects 2023 earnings (on an adjusted basis) in the band of $3-$3.75 per share (earlier view: $2.5-$3.5 per share). Adjusted operating margin is now anticipated to be between 7% and 9% (prior guidance:11-13%). With air-travel demand having improved, American Airlines is constantly looking to add routes and broaden network.
Impressive Price Performance: Driven by the rosy air-travel-demand scenario, shares of AAL have gained 23% year to date compared with its industry’s growth of 19%.
Image Source: Zacks Investment Research
Bullish Industry Rank: The industry, to which AAL belongs, currently has a Zacks Industry Rank of 55 (of 250 plus groups). Such a solid rank places AAL in the top 22% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a robust stock in a weak industry. Therefore, taking the industry’s performance into consideration becomes imperative.
United Airlines is seeing steady recovery in domestic and international air-travel demand. Owing to this, UAL expects revenues for the September quarter to grow 10-13% year over year. Our third-quarter total revenue estimate hints at an increase of 11.4% year over year.
For third-quarter 2023, United Airlines anticipates capacity to improve 16% from the year-ago reported figure. The Zacks Consensus Estimate for UAL’s current-year earnings has been revised 19.7% upward over the past 60 days.
Improved air-travel demand, particularly on the domestic front, is aiding Delta. Due to the positive, DAL reported better-than-expected earnings per share and revenues in second-quarter 2023. Third-quarter earnings are forecast in the range of $2.2-$2. 5 per share.
Management raised its earnings per share outlook for the current year. The company now estimates 2023 earnings (on an adjusted basis) in the band of $6-$7 per share (previous view: $6 per share). The Zacks Consensus Estimate for DAL’s current-year earnings has been revised 23.5% upward over the past 60 days.
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Here's Why You May Bet on American Airlines (AAL) Stock Now
American Airlines (AAL - Free Report) is benefiting from an uptick in air-travel demand. An upsurge in passenger volumes makes the AAL stock an attractive investment opportunity currently.
Let’s delve deep to unearth the factors working in favor of the Zacks Rank #2 (Buy) stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter and current-year earnings has been revised 7.2% and 15.8% upward over the past 60 days, respectively. Such favorable estimate revisions reflect brokers’ confidence in the stock.
Given the wealth of information at the brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because it serves as a key indicator in determining the price of a stock.
Buoyant Air-Travel Demand: Improved air-travel demand, particularly on the domestic front, is aiding American Airlines. Passenger revenues, which account for the bulk of the top line, have been very strong. Recently, management lifted earnings per share forecast for 2023, primarily driven by the rosy scenario.
The company now expects 2023 earnings (on an adjusted basis) in the band of $3-$3.75 per share (earlier view: $2.5-$3.5 per share). Adjusted operating margin is now anticipated to be between 7% and 9% (prior guidance:11-13%). With air-travel demand having improved, American Airlines is constantly looking to add routes and broaden network.
Impressive Price Performance: Driven by the rosy air-travel-demand scenario, shares of AAL have gained 23% year to date compared with its industry’s growth of 19%.
Image Source: Zacks Investment Research
Bullish Industry Rank: The industry, to which AAL belongs, currently has a Zacks Industry Rank of 55 (of 250 plus groups). Such a solid rank places AAL in the top 22% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a robust stock in a weak industry. Therefore, taking the industry’s performance into consideration becomes imperative.
Other Key Picks
Investors interested in the Zacks Airline industry may also consider stocks like United Airlines (UAL - Free Report) and Delta Air Lines (DAL - Free Report) . While UAL sports a Zacks Rank #1 (Strong Buy), DAL carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
United Airlines is seeing steady recovery in domestic and international air-travel demand. Owing to this, UAL expects revenues for the September quarter to grow 10-13% year over year. Our third-quarter total revenue estimate hints at an increase of 11.4% year over year.
For third-quarter 2023, United Airlines anticipates capacity to improve 16% from the year-ago reported figure. The Zacks Consensus Estimate for UAL’s current-year earnings has been revised 19.7% upward over the past 60 days.
Improved air-travel demand, particularly on the domestic front, is aiding Delta. Due to the positive, DAL reported better-than-expected earnings per share and revenues in second-quarter 2023. Third-quarter earnings are forecast in the range of $2.2-$2. 5 per share.
Management raised its earnings per share outlook for the current year. The company now estimates 2023 earnings (on an adjusted basis) in the band of $6-$7 per share (previous view: $6 per share). The Zacks Consensus Estimate for DAL’s current-year earnings has been revised 23.5% upward over the past 60 days.