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Travel Demand Aids American Airlines (AAL) Amid High Debt
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We have recently updated a report on American Airlines Group Inc. (AAL - Free Report) .
Thanks to an improvement in air-travel demand in the United States, despite omicron-led woes, American Airlines witnessed a 5.1% sequential increase in fourth-quarter 2021 passenger revenues. With economic activities picking up, passenger revenues (up 79.5% in 2021) have been increasing from the beginning of 2021 itself.
Management's focus on generating cargo revenues is encouraging and is supporting the top line. In 2021, cargo revenues increased 70.8% year over year, with cargo yield per ton mile moving 13.74% northward.
The current scenario of rising fuel costs does not bode well for the airline. During the fourth quarter, the average fuel price per gallon (including related taxes) climbed to $2.36 from $1.27 a year ago. With oil prices continuing to move up, the company estimates the average fuel price per gallon to be even higher in the March quarter. Fuel cost per gallon in first-quarter 2022 is expected in the $2.41-$2.46 band.
American Airlines’ current ratio (a measure of liquidity) at the end of fourth-quarter 2021 stood at 0.91. A current ratio of less than 1 is not desirable as it implies that the company doesn't have enough liquid assets to cover its short-term liabilities.
Zacks Rank & Stocks to Consider
American Airlines carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Transportation sector are J.B. Hunt Transport Services, Inc. (JBHT - Free Report) , Union Pacific Corporation (UNP - Free Report) and Triton International Limited .
The long-term expected EPS (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all its segments. While 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 favorable customer freight mix as well as higher contractual and spot rates.
JBHT’s measures to reward shareholders are encouraging. Driven by the tailwinds, the stock has increased 24.4% in the past year. J.B. Hunt currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected EPS (three to five years) growth rate for Union Pacific is pegged at 10%. With economic activities gaining pace, freight revenues (accounting for a bulk of the top line) are improving. Freight revenues increased 11% year over year in 2021. Segment-wise, freight revenues in 2021 increased 12%, 11% and 11% in the bulk, industrial and premium units, respectively.
Driven by the tailwinds, the stock has increased 23.5% in the past year. UNP currently carries a Zacks Rank #2.
The long-term expected EPS (three to five years) growth rate for Triton is pegged at 10%. Gradual increases in trade volumes and container demand bode well for the company. With easing coronavirus-led restrictions in the United States and Europe, the company saw a strong rebound in its business in the third, the fourth of 2020 as well as in each of the four quarters of 2021.
Driven by the tailwinds, the stock has increased 7.1% in the past year. TRTN currently carries a Zacks Rank #2.
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Travel Demand Aids American Airlines (AAL) Amid High Debt
We have recently updated a report on American Airlines Group Inc. (AAL - Free Report) .
Thanks to an improvement in air-travel demand in the United States, despite omicron-led woes, American Airlines witnessed a 5.1% sequential increase in fourth-quarter 2021 passenger revenues. With economic activities picking up, passenger revenues (up 79.5% in 2021) have been increasing from the beginning of 2021 itself.
Management's focus on generating cargo revenues is encouraging and is supporting the top line. In 2021, cargo revenues increased 70.8% year over year, with cargo yield per ton mile moving 13.74% northward.
The current scenario of rising fuel costs does not bode well for the airline. During the fourth quarter, the average fuel price per gallon (including related taxes) climbed to $2.36 from $1.27 a year ago. With oil prices continuing to move up, the company estimates the average fuel price per gallon to be even higher in the March quarter. Fuel cost per gallon in first-quarter 2022 is expected in the $2.41-$2.46 band.
American Airlines’ current ratio (a measure of liquidity) at the end of fourth-quarter 2021 stood at 0.91. A current ratio of less than 1 is not desirable as it implies that the company doesn't have enough liquid assets to cover its short-term liabilities.
Zacks Rank & Stocks to Consider
American Airlines carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Transportation sector are J.B. Hunt Transport Services, Inc. (JBHT - Free Report) , Union Pacific Corporation (UNP - Free Report) and Triton International Limited .
The long-term expected EPS (three to five years) growth rate for J.B. Hunt is pegged at 15%. JBHT is benefiting from strong performances across all its segments. While 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 favorable customer freight mix as well as higher contractual and spot rates.
JBHT’s measures to reward shareholders are encouraging. Driven by the tailwinds, the stock has increased 24.4% in the past year. J.B. Hunt currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term expected EPS (three to five years) growth rate for Union Pacific is pegged at 10%. With economic activities gaining pace, freight revenues (accounting for a bulk of the top line) are improving. Freight revenues increased 11% year over year in 2021. Segment-wise, freight revenues in 2021 increased 12%, 11% and 11% in the bulk, industrial and premium units, respectively.
Driven by the tailwinds, the stock has increased 23.5% in the past year. UNP currently carries a Zacks Rank #2.
The long-term expected EPS (three to five years) growth rate for Triton is pegged at 10%. Gradual increases in trade volumes and container demand bode well for the company. With easing coronavirus-led restrictions in the United States and Europe, the company saw a strong rebound in its business in the third, the fourth of 2020 as well as in each of the four quarters of 2021.
Driven by the tailwinds, the stock has increased 7.1% in the past year. TRTN currently carries a Zacks Rank #2.