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Why American Airlines Group Inc Stock Has Declined This Year

Here's the truth behind AAL stock's lackluster performance

By , Zacks Investment Research

American Airlines Stock Investors Have Much to Think About Headed Into Earnings

Source: Oliver Holzbauer via Flickr

Shares of American Airlines Group Inc (NASDAQ:AAL) have lost 17.5% so far this year, underperforming its industry‘s decline of 11.8%.

AAL Stock YTD Price Performance

AAL Stock YTD Price Performance

Reasons Behind the Lackluster Price Performance

High fuel costs have been the primary reason behind the AAL stock’s dismal performance. In fact, oil prices have increased roughly 10% on a year-to-date basis.

In the second quarter, high fuel costs are expected to limit bottom-line growth at American Airlines as was the case in first-quarter 2018. Average fuel price per gallon rose 23.6% year-over-year to $2.10-per-gallon in the first quarter. Fuel prices are anticipated to be even higher (between $2.18 and $2.23-per-gallon) in the second quarter.

Apart from high fuel costs, expenses pertaining to labor are expected to weigh on the bottom line in the second quarter. Consolidated cost per available seat miles (excluding special items and fuel) is anticipated to increase 3.5% in the second quarter of 2018.

American Airlines’ high debt levels are added concerns. Apart from AAL stock, the rise in oil prices has also hurt other airline operators like Southwest Airlines Co (NYSE:LUV), Delta Air Lines, Inc. (NYSE:DAL) and United Continental Holdings Inc (NYSE:UAL).

Other Unfavorable Readings

The Zacks Consensus Estimate for second-quarter and full-year 2018 earnings moved south 8.5% and 7.9%, respectively, in the last 60 days. This reflects investor’s pessimism surrounding the stock.

Furthermore, the company’s Momentum Score of D highlights its short-term unattractiveness. Undoubtedly, the above negatives substantiate the company’s Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Southwest Airlines Co. (LUV): Free Stock Analysis Report

Delta Air Lines, Inc. (DAL): Free Stock Analysis Report

United Continental Holdings, Inc. (UAL): Free Stock Analysis Report

American Airlines Group Inc. (AAL): Free Stock Analysis Report

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Article printed from InvestorPlace Media, https://investorplace.com/2018/06/why-american-airlines-group-inc-stock-has-declined-this-year/.

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