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American Airlines (AAL) Hits 52-Week High: What's Driving It?
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Shares of American Airlines Group Inc. (AAL - Free Report) scaled a 52-week high of $18.18 in the trading session on Jul 03, 2023, before closing a tad lower at $18.10.
The company’s shares have gained 42.3% year to date, significantly higher than 36% growth of the industry it belongs to.
Image Source: Zacks Investment Research
Let’s find out the factors supporting the uptick.
Continued recovery in air-travel demand, particularly on the domestic front, bodes well for American Airlines. Owing to upbeat air-travel demand, management recently issued a bullish forecast for second-quarter 2023.AAL raised its second-quarter earnings per share (EPS) (excluding net special items) view in the range of $1.45-$1.65 (earlier guidance: $1.20-$1.40). The adjusted operating margin is now anticipated in the 12.5-14.5% band (earlier guidance:11-13%). Average fuel cost per gallon is now expected in the range of $2.55-$2.65 (earlier guidance: $2.65-$2.75).
AAL now expects total revenue per available seat miles (a measure of unit revenue) to decline 1%-3% from second-quarter 2022 actuals (the earlier estimate was for a 2-4% decline).
Non-fuel unit costs are still expected to increase 3.5-5.5% year over year. Available seat miles (a measure of capacity) are still estimated to increase 3.5-5.5% year over year.
For 2023, AAL has reinstated its outlook. Management still expects available seat miles to increase 5-8% year over year. Our model estimates an increase of 6.1% year over year. Non-fuel unit costs are still expected to increase 2-5% year over year. Our estimate hints at a 3.4% year-over-year increase. AAL still expects EPS (excluding net special items) in the $2.50-$3.50 range.
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 Mar 31, 2023, the carrier reduced its debt levels by more than $9 billion from peak levels in the second quarter of 2021.
Zacks Rank & Stocks to Consider
American Airlines currently carries a Zacks Rank #3 (Hold).
Copa Holdings has an expected earnings growth rate of 75.42% for the current year. CPA delivered a trailing four-quarter earnings surprise of 14.60%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 25.5% over the past 90 days. Shares of CPA have soared 32.5% over the past six months.
Allegiant has an expected earnings growth rate of more than 100% for the current year. ALGT delivered a trailing four-quarter earnings surprise of 79.78%, on average.
The Zacks Consensus Estimate for ALGT’s current-year earnings has improved 46.5% over the past 90 days. Shares of ALGT have surged 74% over the past six months.
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American Airlines (AAL) Hits 52-Week High: What's Driving It?
Shares of American Airlines Group Inc. (AAL - Free Report) scaled a 52-week high of $18.18 in the trading session on Jul 03, 2023, before closing a tad lower at $18.10.
The company’s shares have gained 42.3% year to date, significantly higher than 36% growth of the industry it belongs to.
Image Source: Zacks Investment Research
Let’s find out the factors supporting the uptick.
Continued recovery in air-travel demand, particularly on the domestic front, bodes well for American Airlines. Owing to upbeat air-travel demand, management recently issued a bullish forecast for second-quarter 2023. AAL raised its second-quarter earnings per share (EPS) (excluding net special items) view in the range of $1.45-$1.65 (earlier guidance: $1.20-$1.40). The adjusted operating margin is now anticipated in the 12.5-14.5% band (earlier guidance:11-13%). Average fuel cost per gallon is now expected in the range of $2.55-$2.65 (earlier guidance: $2.65-$2.75).
AAL now expects total revenue per available seat miles (a measure of unit revenue) to decline 1%-3% from second-quarter 2022 actuals (the earlier estimate was for a 2-4% decline).
Non-fuel unit costs are still expected to increase 3.5-5.5% year over year. Available seat miles (a measure of capacity) are still estimated to increase 3.5-5.5% year over year.
For 2023, AAL has reinstated its outlook. Management still expects available seat miles to increase 5-8% year over year. Our model estimates an increase of 6.1% year over year. Non-fuel unit costs are still expected to increase 2-5% year over year. Our estimate hints at a 3.4% year-over-year increase. AAL still expects EPS (excluding net special items) in the $2.50-$3.50 range.
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 Mar 31, 2023, the carrier reduced its debt levels by more than $9 billion from peak levels in the second quarter of 2021.
Zacks Rank & Stocks to Consider
American Airlines currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the Zacks Transportation sector are Copa Holdings (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) . Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings has an expected earnings growth rate of 75.42% for the current year. CPA delivered a trailing four-quarter earnings surprise of 14.60%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 25.5% over the past 90 days. Shares of CPA have soared 32.5% over the past six months.
Allegiant has an expected earnings growth rate of more than 100% for the current year. ALGT delivered a trailing four-quarter earnings surprise of 79.78%, on average.
The Zacks Consensus Estimate for ALGT’s current-year earnings has improved 46.5% over the past 90 days. Shares of ALGT have surged 74% over the past six months.