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Bear of the Day: American Airlines (AAL)

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Picking a Bear of the Day today is pretty darn easy. Just throw a dart at a dartboard and you’re bound to hit one. Stocks are blowing up left and right while the market is coming under pressure, testing key technical levels. Today I’m looking at a stock which is in the airline industry. Why? Well, the airline industry ranks in the Bottom 6% of our Zacks Industry Rank. That means there are several names which have seen earnings estimates revised to the downside.

Today’s Bear of the Day is American Airlines (AAL - Free Report) . American Airlines Group Inc., through its subsidiaries, operates as a network air carrier. It provides scheduled air transportation services for passengers and cargo. As of December 31, 2017, the company operated a mainline fleet of 948 aircraft. It serves 350 destinations in approximately 50 countries, principally from its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, and Phoenix, as well as in Washington, D.C. 

Currently, the stock is a Zacks Rank #5 (Strong Sell). The reason for the unfavorable Zacks Rank lies in the recent string of negative revisions coming from analysts. Over the last thirty days, nine analysts have cut their earnings estimates for the current year as well as next year. That’s slashed the Zacks Consensus Estimate for the current year from $4.77 to $4.28 while next year’s number had come down from $5.84 to $5.13.

The negative revisions are a big reason why AAL has come under so much pressure. This is a stock which was trading up over $57 in March. Since then it’s taken a tumble, coming all the way down to fresh lows under $32. The stock is set to report earnings before the bell next Thursday October 25th. Analysts will be looking for EPS of $1.12, down from expectations calling for $1.45 just ninety days ago.

While there are no stocks in the airline industry which are Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) stocks. There are several Zacks Rank #3 (Hold) stocks which could be better ways to play this industry. Those stocks include Alaska Air (ALK - Free Report) and Allegiant Travel (ALGT - Free Report) .

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