A month has gone by since the last earnings report for American Airlines (AAL). Shares have added about 3.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American Airlines due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
American Airlines Incurs Loss in Q2
American Airlines incurred a loss (excluding $3 from non-recurring items) of $7.82 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $6.75. However, the company delivered earnings per share of $1.82 in the year-ago quarter. Results in the second quarter were hurt by the coronavirus-induced air-travel demand woes.
Operating revenues of $1,622 million slumped 86.4% year over year but surpassed the Zacks Consensus Estimate of $1,481.1 million. Passenger revenues, which accounted for bulk of the top line (68.3%), plunged 89.9% to $1,108 million. Cargo revenues also declined 41% to $130 million, mainly due to 72.6% lower cargo ton miles. Other revenues dropped 47.2% as well.
Total revenue per available seat mile (TRASM: a key measure of unit revenues) decreased 42.6% to 9.5 cents in the reported quarter. Passenger revenue per available seat miles (PRASM) fell 57.4% to 6.48 cents in the period. Moreover, consolidated yield was down 12.8%.
While consolidated traffic (measured in revenue passenger miles) plummeted 88.5%, capacity (measured in average seat miles) contracted 76.4%. Consolidated load factor (percentage of seats filled by passengers) decreased 44.3 percentage points to 42.3% as traffic decline was more than capacity reduction.
Total operating costs (on a reported basis) declined 62% year over year to $4,108 million with expenses pertaining to aircraft fuel and related taxes tumbling 89.1%. Consolidated operating costs per available seat mile (CASM: excluding fuel and special items) skyrocketed more than 100% to 32.04 cents due to weak capacity. With major part of the fleet remaining grounded/under-utilized, fuel gallons consumed tanked 76.3% to 275 million. Average fuel price per gallon (including related taxes) also declined 47.5% to $1.13.
Moreover, American Airlines expects system capacity for the September quarter to nosedive nearly 60% on a year-over-year basis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -34.37% due to these changes.
Currently, American Airlines has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, American Airlines has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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