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Here's Why Investors Should Buy American Airlines (AAL) Stock Now
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American Airlines Group Inc. (AAL - Free Report) has been aided by solid air-travel demand and debt-reduction methods.
Let’s take a look at the factors that make the stock an attractive pick at the moment.
Solid Rank & VGM Score: American Airlines currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company seems to be an appropriate investment proposition at the moment.
Northward Estimate Revisions: Three estimates for 2023 moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for 2023 earnings has moved up marginally in the past 60 days.
Positive Earnings Surprise History: American Airlines has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an earnings surprise of 23.8%, on average.
Strong Growth Prospects: The Zacks Consensus Estimate for 2023 earnings is pegged at $2.41, indicating more than 100% growth from the year- ago level. The company’s long-term earnings growth rate is 190.4%.
Driving Factors: Continued recovery in air-travel demand, particularly on the domestic front, bodes well for American Airlines. Reflecting the boost in air-travel demand, consolidated traffic (measured in revenue passenger miles) rose 8.3% in the first nine months of 2023. To cater to this increased demand, capacity (measured in average seat miles) increased 7% in the same time period.
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 Sep 30, 2023, the carrier reduced its debt level by more than $10 billion from the mid-2021 peak level.
RYAAY is benefiting from the buoyant air-traffic scenario post Covid. Traffic grew 11% to 105.4 million during the first half of fiscal 2024. On the back of the robust traffic scenario, RYAAY’s profit after tax was €2.18 billion during the first half of fiscal 2024, up 59% year over year. Ryanair expects fiscal 2024 traffic to be 183.5 million.
SKYW's fleet modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for 2024 earnings increased 3.5% in the past 60 days.
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Here's Why Investors Should Buy American Airlines (AAL) Stock Now
American Airlines Group Inc. (AAL - Free Report) has been aided by solid air-travel demand and debt-reduction methods.
Let’s take a look at the factors that make the stock an attractive pick at the moment.
Solid Rank & VGM Score: American Airlines currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company seems to be an appropriate investment proposition at the moment.
Northward Estimate Revisions: Three estimates for 2023 moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for 2023 earnings has moved up marginally in the past 60 days.
Positive Earnings Surprise History: American Airlines has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an earnings surprise of 23.8%, on average.
Strong Growth Prospects: The Zacks Consensus Estimate for 2023 earnings is pegged at $2.41, indicating more than 100% growth from the year- ago level. The company’s long-term earnings growth rate is 190.4%.
Driving Factors: Continued recovery in air-travel demand, particularly on the domestic front, bodes well for American Airlines. Reflecting the boost in air-travel demand, consolidated traffic (measured in revenue passenger miles) rose 8.3% in the first nine months of 2023. To cater to this increased demand, capacity (measured in average seat miles) increased 7% in the same time period.
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 Sep 30, 2023, the carrier reduced its debt level by more than $10 billion from the mid-2021 peak level.
Other Stocks to Consider
Investors interested in the Zacks Transportation sector may consider some other top-ranked stocks like Ryanair Holdings (RYAAY - Free Report) and SkyWest (SKYW - Free Report) , each currently sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
RYAAY is benefiting from the buoyant air-traffic scenario post Covid. Traffic grew 11% to 105.4 million during the first half of fiscal 2024. On the back of the robust traffic scenario, RYAAY’s profit after tax was €2.18 billion during the first half of fiscal 2024, up 59% year over year. Ryanair expects fiscal 2024 traffic to be 183.5 million.
SKYW's fleet modernization efforts are commendable. Initiatives to reward its shareholders also bode well. The Zacks Consensus Estimate for 2024 earnings increased 3.5% in the past 60 days.