We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Travel Demand Aids American Airlines (AAL) Amid High Fuel Cost
Read MoreHide Full Article
We have recently updated a report on American Airlines Group Inc. (AAL - Free Report) .
Owing to an improvement in air-travel demand in the United States, American Airlines witnessed a 20% sequential increase in third-quarter 2021 passenger revenues. With economic activities picking up, passenger revenues (up 56.1% in the first nine months of 2021) have been increasing from the beginning of 2021 itself.
The carrier's debt-reduction efforts are impressive as well. Management aims to lower debt by $15 billion by 2025-end. The company aims to attain this objective through naturally-occurring amortization. Also, it intends to utilize surplus cash and free cash flow to pay down prepayable debt. In third-quarter 2021, American Airlines prepaid its entire $950 million spare parts term loan facility. During the September quarter, the carrier scheduled debt amortization payments of approximately $649 million and unencumbered 20 Boeing 777-200 aircraft.
The current scenario of rising fuel costs does not bode well for the airline. During the third quarter, the average fuel price per gallon (including related taxes) climbed to $2.07 from $1.23 a year ago as oil prices moved north. With oil prices continuing to move up, the company estimates the average fuel price per gallon to increase to $2.36 in the fourth quarter.
The long-term expected earnings per share (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all its segments. The Dedicated Contract Services (DCS) unit is being aided by fleet-productivity improvement and a rise in average revenue-producing trucks. The Integrated Capacity Solutions (ICS) unit is gaining from a favorable customer freight mix as well as higher contractual and spot rates.
JBHT’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has increased 36.1% in the past year. J.B. Hunt currently carries a Zacks Rank #2 (Buy).
The long-term expected earnings per share (three to five years) growth rate for FedEx is pegged at 12%. FDX is benefitting from a surge in e-commerce demand amid the pandemic.
FDX exited first-quarter fiscal 2022 with cash and equivalents of $6,853 million, much higher than its current debt of $125 million. Driven by the tailwinds, the stock has moved up 2.7% in the past year. FedEx currently carries a Zacks Rank #2.
The long-term expected earnings per share (three to five years) growth rate for Schneider is pegged at 20.7%. SNDR benefits from strong performance in the Intermodal and Logistics units.
SNDR’s third-quarter cash balance is also encouraging. Driven by the tailwinds, the stock has moved up 13.7% in the past year. Schneider currently carries a Zacks Rank #2.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Travel Demand Aids American Airlines (AAL) Amid High Fuel Cost
We have recently updated a report on American Airlines Group Inc. (AAL - Free Report) .
Owing to an improvement in air-travel demand in the United States, American Airlines witnessed a 20% sequential increase in third-quarter 2021 passenger revenues. With economic activities picking up, passenger revenues (up 56.1% in the first nine months of 2021) have been increasing from the beginning of 2021 itself.
The carrier's debt-reduction efforts are impressive as well. Management aims to lower debt by $15 billion by 2025-end. The company aims to attain this objective through naturally-occurring amortization. Also, it intends to utilize surplus cash and free cash flow to pay down prepayable debt. In third-quarter 2021, American Airlines prepaid its entire $950 million spare parts term loan facility. During the September quarter, the carrier scheduled debt amortization payments of approximately $649 million and unencumbered 20 Boeing 777-200 aircraft.
The current scenario of rising fuel costs does not bode well for the airline. During the third quarter, the average fuel price per gallon (including related taxes) climbed to $2.07 from $1.23 a year ago as oil prices moved north. With oil prices continuing to move up, the company estimates the average fuel price per gallon to increase to $2.36 in the fourth quarter.
Zacks Rank & Stocks to Consider
American Airlines currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
Some better-ranked stocks in the broader Zacks Transportation sector are J.B. Hunt Transport Services (JBHT - Free Report) , FedEx Corporation (FDX - Free Report) and Schneider National (SNDR - Free Report) .
The long-term expected earnings per share (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all its segments. The Dedicated Contract Services (DCS) unit is being aided by fleet-productivity improvement and a rise in average revenue-producing trucks. The Integrated Capacity Solutions (ICS) unit is gaining from a favorable customer freight mix as well as higher contractual and spot rates.
JBHT’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has increased 36.1% in the past year. J.B. Hunt currently carries a Zacks Rank #2 (Buy).
The long-term expected earnings per share (three to five years) growth rate for FedEx is pegged at 12%. FDX is benefitting from a surge in e-commerce demand amid the pandemic.
FDX exited first-quarter fiscal 2022 with cash and equivalents of $6,853 million, much higher than its current debt of $125 million. Driven by the tailwinds, the stock has moved up 2.7% in the past year. FedEx currently carries a Zacks Rank #2.
The long-term expected earnings per share (three to five years) growth rate for Schneider is pegged at 20.7%. SNDR benefits from strong performance in the Intermodal and Logistics units.
SNDR’s third-quarter cash balance is also encouraging. Driven by the tailwinds, the stock has moved up 13.7% in the past year. Schneider currently carries a Zacks Rank #2.