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American Airlines (AAL) Up 14% in the Past 6 Months: Here's How
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American Airlines Group Inc. (AAL - Free Report) shares had an impressive run over the past six months. The stock has gained 14.1% compared with an 11.8% rise in the industry it belongs to.
Reasons for the Upside
Continued recovery in air-travel demand, particularly on the domestic front, bodes well for American Airlines. In the fourth quarter of 2022, passenger revenues, accounting for the bulk of the top line (92%), increased to $12,131 million from $8,382 million a year ago.
Driven by soaring demand on healthy bookings, in the March quarter, total revenues per available seat miles are expected to be 24-27% higher than the first-quarter 2022 actuals.
Image Source: Zacks Investment Research
The carrier's debt-reduction efforts are impressive as well. Management aims to reduce its 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. As of Dec 31, 2022, the carrier reduced its debt levels by more than $8 billion from peak levels in the second quarter of 2021.
Favorable Estimates Revision
Driven by the above tailwinds, the Zacks Consensus Estimate for 2023 earnings has moved up 31.7% to $2.16 per share in the past 90 days.
Copa Holdings currently sports a Zacks Rank #1. The company’s focus on its cargo segment is very encouraging. In fourth-quarter 2022, cargo and mail revenues jumped 69% to $27.09 million, owing to higher cargo volumes and yields.
For first-quarter and full-year 2023, CPA’s earnings are expected to register 41% and 4.9% growth, respectively, on a year-over-year basis.
Alaska Air, carrying a Zacks Rank #2 at present, is seeing continued improvement in air-travel demand. On the back of upbeat air-travel demand and favorable pricing, Alaska Air reported better-than-expected earnings per share for fourth-quarter 2022. ALK expects first-quarter 2023 total revenues to increase 29-32% from the first-quarter 2022 actuals.
For first-quarter and full-year 2023, ALK’s earnings are expected to register 69.9% and 31.7% growth, respectively, on a year-over-year basis.
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American Airlines (AAL) Up 14% in the Past 6 Months: Here's How
American Airlines Group Inc. (AAL - Free Report) shares had an impressive run over the past six months. The stock has gained 14.1% compared with an 11.8% rise in the industry it belongs to.
Reasons for the Upside
Continued recovery in air-travel demand, particularly on the domestic front, bodes well for American Airlines. In the fourth quarter of 2022, passenger revenues, accounting for the bulk of the top line (92%), increased to $12,131 million from $8,382 million a year ago.
Driven by soaring demand on healthy bookings, in the March quarter, total revenues per available seat miles are expected to be 24-27% higher than the first-quarter 2022 actuals.
Image Source: Zacks Investment Research
The carrier's debt-reduction efforts are impressive as well. Management aims to reduce its 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. As of Dec 31, 2022, the carrier reduced its debt levels by more than $8 billion from peak levels in the second quarter of 2021.
Favorable Estimates Revision
Driven by the above tailwinds, the Zacks Consensus Estimate for 2023 earnings has moved up 31.7% to $2.16 per share in the past 90 days.
Zacks Rank and Other Stocks to Consider
AAL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the Zacks Transportation sector are Copa Holdings, S.A. (CPA - Free Report) and Alaska Air Group, Inc. (ALK - Free Report) .
Copa Holdings currently sports a Zacks Rank #1. The company’s focus on its cargo segment is very encouraging. In fourth-quarter 2022, cargo and mail revenues jumped 69% to $27.09 million, owing to higher cargo volumes and yields.
For first-quarter and full-year 2023, CPA’s earnings are expected to register 41% and 4.9% growth, respectively, on a year-over-year basis.
Alaska Air, carrying a Zacks Rank #2 at present, is seeing continued improvement in air-travel demand. On the back of upbeat air-travel demand and favorable pricing, Alaska Air reported better-than-expected earnings per share for fourth-quarter 2022. ALK expects first-quarter 2023 total revenues to increase 29-32% from the first-quarter 2022 actuals.
For first-quarter and full-year 2023, ALK’s earnings are expected to register 69.9% and 31.7% growth, respectively, on a year-over-year basis.