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Bear Of The Day: American Airlines (AAL)

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American Airlines (AAL - Free Report) is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.  I know what you are thinking... won't there be some stimulus soon that will help the airlines out?  Won't that help push the stock price higher?  Well I certainly hope so!  And I hope that those in need get that stimulus as soon as possible.

This is the Bear of the Day, and really it is a chance for someone to realize the Zacks Rank is all about earnings estimate revisions and not a headline driven receommndation.  I know from experience in wiring these over the last several years that a lot of people don't understand the Rank and what it does and if AAL is surgiing on Monday that I just look like an idiot.  

How could a stock that is surging be the Bear of the Day?

Well the Bull and Bear are written the day before and if we truly knew which stocks would be up the most and down the most would we give that away for free?  The articles are more about showing why a stock is a Zacks Rank #1 (Strong Buy) or in this case a Zacks Rank #5 (Strong Sell).

Earnings Misses

The last two quarters have been impacted by COVID, but Wall Street knew that was the case.  Despite that the estimates were still too high with the March quarter coming in 49 cents below expectations for a 22% negative surprise.

The June quarter came in $1.07 below expectations for a 15% negative earnings surprise.

Earnings reports have a small impact on the Zacks Rank... but the real thing that moves the Rank are forward earnings estimates.

Estimates Fall For AAL

After the recent miss, numbersgot worse and worse.  

The current quarter saw a small improvement of 9 cents over the last 670 days, bu next quarter saw a drop of 20 cents.

The Zacks Rank is most heavily influenced by the full year numbers and I see 2020 moviing from a loff of $15 and change to a loss of $18 and now a loss of $19.03.

Next year has seen an increase in the expected loss, from $2.19 to $3.37.

Investors do not want to see losses increase.

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American Airlines Group Inc. (AAL) - free report >>