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The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark in the other one), the average beat being 8.62%.
American Airlines Group Inc. Price and EPS Surprise
Given this backdrop, let's delve deeper to unearth the factors that are likely to have influenced AAL’s fourth-quarter 2022 performance.
We expect upbeat air-travel demand, particularly on the domestic front, to have boosted American Airlines’ top-line performance in the to-be-reported quarter. Driven by the uptick, AAL expects fourth-quarter 2022 adjusted operating margin to increase 10.25-10.5% (prior view: 5.5-7.5%). Total revenues are expected to register 16-17% growth (prior view: 11-13% growth rate).
Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, boosting the top line. Fourth-quarter total revenue per available seat mile is expected to be up almost 24% versus the fourth quarter of 2019 (prior view: up 18-20%). The presence of the Thanksgiving holiday period during the fourth quarter is likely to have boosted passenger volumes. Driven by upbeat traffic, load factor (percentage of seats filled by passengers) is likely to have been impressive in the December-end quarter.
The Zacks Consensus Estimate for load factor is pegged at 84% for fourth-quarter 2022, higher than the 80% reported in fourth-quarter 2019. However, high operating costs are anticipated to have affected the bottom-line performance in the to-be-reported quarter. AAL expects adjusted earnings per share of $1.12-$1.17.
What Our Model Says
Our proven model conclusively predicts an earnings beat for AAL this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
American Airlines has an Earnings ESP of +16.71% (the Most Accurate Estimate is pinned at 88 cents at present, while the Zacks Consensus Estimate is presently pegged at 75 cents) and a Zacks Rank #2.
Highlights of Q3
American Airlines’ third-quarter 2022 earnings of 69 cents per share surpassed the Zacks Consensus Estimate of 54 cents despite higher costs. In the year-ago quarter, AAL incurred a loss of 99 cents per share when air-travel demand was not as bullish as in the present scenario. The third quarter of 2022 was the second consecutive profitable quarter, excluding net special items at AAL since the onset of the pandemic.
Operating revenues of $13,462 million skyrocketed 50.1% year over year and surpassed the Zacks Consensus Estimate of $13,457.5 million. This year-over-year jump reflects upbeat air-travel demand. Buoyant air-travel demand is also reflected by the total operating revenue increase of 13% from the third-quarter 2019 (pre-coronavirus) levels despite operating at 9.6% lower capacity.
Other Stocks to Consider
Here are a few other stocks from the broader Zacks Transportation sector that investors may consider as well, as our model shows that these too have the right combination of elements to beat on their fourth-quarter 2022 earnings.
JetBlue Airways (JBLU - Free Report) currently has an Earnings ESP of +6.77% and a Zacks Rank #3. JBLU will release results on Jan 26.
We expect upbeat air-travel demand to have aided JBLU’s fourth-quarter performance. However, high costs are likely to have been a dampener.
Norfolk Southern Corporation (NSC - Free Report) has an Earnings ESP of +1.42% and a Zacks Rank #3 at present. NSC will release results on Jan 25.
We expect the upbeat demand scenario to have aided NSC’s fourth-quarter performance. However, high fuel costs are expected to have been a dampener.
Image: Shutterstock
Is a Beat in Store for American Airlines (AAL) in Q4 Earnings?
American Airlines (AAL - Free Report) is scheduled to report fourth-quarter 2022 results on Jan 26, before market open.
The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark in the other one), the average beat being 8.62%.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
Given this backdrop, let's delve deeper to unearth the factors that are likely to have influenced AAL’s fourth-quarter 2022 performance.
We expect upbeat air-travel demand, particularly on the domestic front, to have boosted American Airlines’ top-line performance in the to-be-reported quarter. Driven by the uptick, AAL expects fourth-quarter 2022 adjusted operating margin to increase 10.25-10.5% (prior view: 5.5-7.5%). Total revenues are expected to register 16-17% growth (prior view: 11-13% growth rate).
Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, boosting the top line. Fourth-quarter total revenue per available seat mile is expected to be up almost 24% versus the fourth quarter of 2019 (prior view: up 18-20%). The presence of the Thanksgiving holiday period during the fourth quarter is likely to have boosted passenger volumes. Driven by upbeat traffic, load factor (percentage of seats filled by passengers) is likely to have been impressive in the December-end quarter.
The Zacks Consensus Estimate for load factor is pegged at 84% for fourth-quarter 2022, higher than the 80% reported in fourth-quarter 2019. However, high operating costs are anticipated to have affected the bottom-line performance in the to-be-reported quarter. AAL expects adjusted earnings per share of $1.12-$1.17.
What Our Model Says
Our proven model conclusively predicts an earnings beat for AAL this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
American Airlines has an Earnings ESP of +16.71% (the Most Accurate Estimate is pinned at 88 cents at present, while the Zacks Consensus Estimate is presently pegged at 75 cents) and a Zacks Rank #2.
Highlights of Q3
American Airlines’ third-quarter 2022 earnings of 69 cents per share surpassed the Zacks Consensus Estimate of 54 cents despite higher costs. In the year-ago quarter, AAL incurred a loss of 99 cents per share when air-travel demand was not as bullish as in the present scenario. The third quarter of 2022 was the second consecutive profitable quarter, excluding net special items at AAL since the onset of the pandemic.
Operating revenues of $13,462 million skyrocketed 50.1% year over year and surpassed the Zacks Consensus Estimate of $13,457.5 million. This year-over-year jump reflects upbeat air-travel demand. Buoyant air-travel demand is also reflected by the total operating revenue increase of 13% from the third-quarter 2019 (pre-coronavirus) levels despite operating at 9.6% lower capacity.
Other Stocks to Consider
Here are a few other stocks from the broader Zacks Transportation sector that investors may consider as well, as our model shows that these too have the right combination of elements to beat on their fourth-quarter 2022 earnings.
JetBlue Airways (JBLU - Free Report) currently has an Earnings ESP of +6.77% and a Zacks Rank #3. JBLU will release results on Jan 26.
We expect upbeat air-travel demand to have aided JBLU’s fourth-quarter performance. However, high costs are likely to have been a dampener.
Norfolk Southern Corporation (NSC - Free Report) has an Earnings ESP of +1.42% and a Zacks Rank #3 at present. NSC will release results on Jan 25.
We expect the upbeat demand scenario to have aided NSC’s fourth-quarter performance. However, high fuel costs are expected to have been a dampener.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.