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
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.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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
