American Airlines: 57% Potential for Growth

Last Updated: 15. Februar 2024By

American Airlines Group is one of the largest airline companies in the world. It combines the companies American Airlines and US Airways. Together, they operate nearly 6,700 flights daily to 350 destinations in over 50 countries. They operate from hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington. Will the new quarterly numbers also cause the stock to take off?

Revenue declines, but beats analyst expectations. Revenue decreased from $13.19 billion in the previous year to $13.06 billion, surpassing the average analyst estimate of $13.05 billion. Earnings per share also decreased from $1.17 in the previous year to $0.29, but beat analysts‘ expectations of $0.08.

„We want to become even more efficient.“ „Looking ahead, we remain focused on providing our customers with a reliable operation and reshaping our business to build an even more efficient airline,“ said American Chief Executive Robert Isom. This doesn’t sound like overly optimistic plans for the future. The company expects full-year earnings per share between $2.25 and $3.25, compared to analysts‘ estimates of $2.25 per share.

Airline stock is undervalued. Conclusion: After the quarterly results were announced, the stock rose by around 8%. In the short term, the airline stock has formed a new uptrend, but in the long term, a downtrend continues to dominate. Analyst sentiment is slightly positive, with 11 out of 21 analysts recommending buying, 8 recommending holding, and 3 recommending selling. The average analyst price target is $17.60 (upgraded from last month). The highest analyst price target is $23, offering a potential upside of over 57%. With a P/E ratio of 5.9 based on earnings estimates for this year, American Airlines is very lowly valued. If you consider the earnings forecast for 2025, the P/E ratio drops to just 4.5.