American Airlines stock has surged 15% after raising earnings outlook, but may be fully valued.

From Nasdaq: 2024-12-22 21:49:23

American Airlines stock (NASDAQ: AAL) has surged 15% this month after raising its Q4 earnings outlook to $0.55-$0.75 per share. A recently announced co-branded credit card with Citibank is expected to generate $10 billion in annual revenue, boosting pre-tax income by $1.5 billion. AAL stock has risen 31% since early 2023, driven by a 168% increase in adjusted earnings, offsetting a 51% decrease in trailing P/E ratio.

American Airlines’ earnings growth of 168% since 2022 was due to higher revenues and margin expansion. Revenue rose from $49 billion to $54 billion, with capacity up 12% to 291 billion. Adjusted net margin expanded from 0.7% to 1.7%. However, investors are concerned about low margins, high leverage, and increased operational costs affecting profitability.

At $17 per share, AAL stock is up 22% YTD but may be fully valued. Trefis estimates a $15 valuation, reflecting a 10% downside. The stock has underperformed the S&P 500 in recent years. Investors may consider other airline stocks like Alaska Air for better gains. AAL stock has seen returns of 15% MTD and 22% YTD in December 2024. 1. The U.S. economy added 943,000 jobs in July, surpassing expectations and marking the largest gain since August 2020. The unemployment rate also dropped to 5.4%, compared to 5.9% in June. These positive numbers indicate a strong recovery from the impact of the pandemic on the job market.

2. In a significant move, Pfizer and BioNTech announced plans to seek authorization for a third dose of their COVID-19 vaccine, citing data showing waning immunity over time. The companies aim to provide additional protection against the Delta variant and maintain high levels of efficacy in the face of evolving variants.

3. The Tokyo Olympics have seen a surge in COVID-19 cases among athletes and officials, with a total of 27 new infections reported. Despite strict protocols and frequent testing, concerns over the virus’ spread have prompted calls for stricter measures to ensure the safety of participants and prevent a potential outbreak.

4. The U.S. Food and Drug Administration granted full approval to the Pfizer-BioNTech COVID-19 vaccine, making it the first vaccine to receive such authorization. The move is expected to boost confidence in the vaccine and encourage more people to get vaccinated, as the country continues its efforts to combat the pandemic.



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