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Here's Why American Airlines (AAL) Should Grace Your Portfolio
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American Airlines (AAL - Free Report) is benefiting from the steady recovery in air-travel demand, particularly on the domestic front. The carrier's debt-reduction efforts are impressive as well.
Let’s delve deeper to unearth the tailwinds surrounding the stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for 2023 earnings has been revised 7.19% upward over the past 60 days. The favorable estimate revision reflect the confidence of brokers in the stock.
Given the wealth of information at 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 the path of estimate revisions serves as an important pointer when it comes to ascertaining the stock price.
Positive Earnings Surprise History: AAL has an impressive earnings surprise history. The company outshined the Zacks Consensus Estimate for earnings in three of the past four quarters. The average beat is 8.62%.
Solid Rank & VGM Score: AAL currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company seems to be an appropriate investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bullish Industry Rank: The industry to which American Airlines belongs currently has a Zacks Industry Rank of 37 (of 250 plus groups). Such a solid rank places the industry in the top 15% 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, a mediocre stock in a healthy group is likely to outperform a robust stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Other Tailwinds: Continued recovery in air-travel demand, particularly on the domestic front, bodes well for American Airlines. Driven by soaring demand on healthy bookings, management expects total revenues in the fourth quarter of 2022 to be roughly 11-13% higher than the fourth-quarter 2019 levels. Total revenues per available seat miles is expected to be 18-20% higher than the fourth-quarter 2019 actuals.
With air-travel demand having improved, American Airlines is constantly looking to add routes and broaden network. The carrier's debt-reduction efforts are impressive as well. Management aims to reduce its debt by $15 billion by 2025 end. As of September 30, the carrier reduced its debt levels by $5.6 billion from peak levels in the second quarter of 2021.
Other Key Picks
Investors interested in the broader Transportation sector may also consider the following stocks:
Covenant Logistics (CVLG - Free Report) : CVLG offers a portfolio of transportation and logistics services, including asset-based expedited, dedicated and irregular route truckload capacity, besides asset-light warehousing, transportation management and freight brokerage capability.
The gradually improving freight market scenario is a tailwind to Covenant. CVLG’s cost-control efforts are appreciated as well. CVLG currently sports a Zacks Rank #1. The stock has witnessed the Zacks Consensus Estimate for 2023 earnings being revised 6.3% upward over the past 60 days.
Teekay Tankers (TNK - Free Report) : TNK is being well-served by the increase in tanker rates. A gradual ramp-up in economic activities also bodes well. High fuel costs are, however, weighing on the bottom line.
Teekay Tankers currently sports a Zacks Rank #1. TNK’s shares have soared 67.3% over the past six months. Over the past 60 days, the Zacks Consensus Estimate for 2023 earnings has moved 180% north.
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Here's Why American Airlines (AAL) Should Grace Your Portfolio
American Airlines (AAL - Free Report) is benefiting from the steady recovery in air-travel demand, particularly on the domestic front. The carrier's debt-reduction efforts are impressive as well.
Let’s delve deeper to unearth the tailwinds surrounding the stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for 2023 earnings has been revised 7.19% upward over the past 60 days. The favorable estimate revision reflect the confidence of brokers in the stock.
Given the wealth of information at 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 the path of estimate revisions serves as an important pointer when it comes to ascertaining the stock price.
Positive Earnings Surprise History: AAL has an impressive earnings surprise history. The company outshined the Zacks Consensus Estimate for earnings in three of the past four quarters. The average beat is 8.62%.
Solid Rank & VGM Score: AAL currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company seems to be an appropriate investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bullish Industry Rank: The industry to which American Airlines belongs currently has a Zacks Industry Rank of 37 (of 250 plus groups). Such a solid rank places the industry in the top 15% 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, a mediocre stock in a healthy group is likely to outperform a robust stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.
Other Tailwinds: Continued recovery in air-travel demand, particularly on the domestic front, bodes well for American Airlines. Driven by soaring demand on healthy bookings, management expects total revenues in the fourth quarter of 2022 to be roughly 11-13% higher than the fourth-quarter 2019 levels. Total revenues per available seat miles is expected to be 18-20% higher than the fourth-quarter 2019 actuals.
With air-travel demand having improved, American Airlines is constantly looking to add routes and broaden network. The carrier's debt-reduction efforts are impressive as well. Management aims to reduce its debt by $15 billion by 2025 end. As of September 30, the carrier reduced its debt levels by $5.6 billion from peak levels in the second quarter of 2021.
Other Key Picks
Investors interested in the broader Transportation sector may also consider the following stocks:
Covenant Logistics (CVLG - Free Report) : CVLG offers a portfolio of transportation and logistics services, including asset-based expedited, dedicated and irregular route truckload capacity, besides asset-light warehousing, transportation management and freight brokerage capability.
The gradually improving freight market scenario is a tailwind to Covenant. CVLG’s cost-control efforts are appreciated as well. CVLG currently sports a Zacks Rank #1. The stock has witnessed the Zacks Consensus Estimate for 2023 earnings being revised 6.3% upward over the past 60 days.
Teekay Tankers (TNK - Free Report) : TNK is being well-served by the increase in tanker rates. A gradual ramp-up in economic activities also bodes well. High fuel costs are, however, weighing on the bottom line.
Teekay Tankers currently sports a Zacks Rank #1. TNK’s shares have soared 67.3% over the past six months. Over the past 60 days, the Zacks Consensus Estimate for 2023 earnings has moved 180% north.