American Airlines Group’s stock is owned by many different institutional and retail investors. Top institutional shareholders include Primecap https://dotbig.com/markets/stocks/AAL/ Management Co. CA (6.08%), Citadel Advisors LLC (0.00%), Millennium Management LLC (0.00%), Parallax Volatility Advisers L.P.

Between the company’s massive debt load and its subpar margin profile, there is far too little upside potential relative to the high risk embedded in dotbig broker. This stock has average movements during the day and with good trading volume, the risk is considered to be medium. During the last day, the stock moved $0.70 between high and low, or 5.15%. For the last week, the stock has had daily average volatility of 4.42%. One basic test for whether a stock is a viable investment is to compare the total assets of a company with the total liabilities. If a company has liabilities exceeding its assets, then the company is considered insolvent. As of their last quarterly report, American Airlines has roughly $76.3 billion in liabilities and $67.4 billion in assets.

• Nevertheless, American Airlines’ pre-tax margin continues to lag key peers, with no sign of improvement.
• This stock has average movements during the day and with good trading volume, the risk is considered to be medium.
• 67 people have searched for AAL on MarketBeat in the last 30 days.
• 54.06% of the stock of American Airlines Group is held by institutions.
• (0.00%), Renaissance Technologies LLC (1.22%) and Nomura Holdings Inc. (0.00%).
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American Airlines Group has been the subject of 6 research reports in the past 90 days, demonstrating strong analyst interest in this stock. Data by YChartsMuch of this increase was driven by management’s decision to increase liquidity to protect against worst-case scenarios. Entering 2020, American Airlines had gross debt of $24.3 billion, plus an additional $9.1 billion of lease liabilities.

Fuel Costs

He graduated from Swarthmore College in 2007, received an M.A. In Political Science from the University of Chicago in 2009, and received his CFA charter in 2017. He is always on the hunt for irrationally beaten-down stocks, particularly in the aerospace, retail, real estate, and auto sectors. Considering American Airlines’ high interest burden and long track record of weak profitability, the company could plunge back to breakeven in such a scenario. Even if it managed to avoid bankruptcy, dotbig broker would likely fall into single-digit territory.

On page 44 of their 10-Q, American notes that they don’t have any fuel hedging in place. If fuel keeps going higher, then it’s much less likely that AAL can make what they need to dig out of their debt load.

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Market Cap is calculated by multiplying the number of shares outstanding by the stock’s price. To calculate, start with total shares outstanding and subtract the number of restricted shares. Restricted stock typically is that issued to company insiders with limits on when it may be traded.Dividend YieldA company’s dividend expressed https://dotbig.com/ as a percentage of its current stock price. American Airlines’ revenue growth was sufficient to return the company to profitability, but it couldn’t fully offset the effect of sky-high fuel prices. The airline giant posted an adjusted pre-tax margin of 5.1%, which was in line with its guidance but down from 9% three years earlier.

Financials

For part of 2021, American Airlines’ market cap actually eclipsed its pre-pandemic level, despite the airline’s greatly-increased debt load and ongoing losses. The up/down ratio is calculated by dividing the value of uptick trades by the value of downtick trades. Net money flow is the value of uptick trades minus the value of downtick trades. So far, the story with airlines is that https://dotbig.com/ business travel still hasn’t recovered, but pleasure travel has. Delta’s CEO expressed confidence in business travel returning, but this is by no means a sure thing. If we continue sliding into a recession, my guess is that pleasure travel will drop, while business travel stays somewhat low. Healthy airlines normally can survive recessions because input costs like fuel drop.

The company also projected that non-fuel unit costs had increased 12% over the same period and fuel costs would average between $4.00 and $4.05 per gallon. This isn’t always a deal-breaker as sometimes companies will have unusual amounts of depreciation that cause them to hold assets on their books for less than their economic value. dotbig forex But when I checked peers Delta , United , and Southwest, , American is the only airline with a negative net worth. I checked smaller peers Spirit Airlines and JetBlue as well and they’re considered solvent. It’s pretty clear from comparing American to competitors that they’re in the weakest financial position of the major airlines.

Private Companies

That will hurt American Airlines’ profitability, due to the significant overlap in the two airlines’ route networks. In this context, it’s important to recognize that American Airlines have benefited from historically loose monetary policy for over a decade. Nobody has a crystal ball to discern what macroeconomic conditions will look like in 2025, but investors must be https://www.cmcmarkets.com/en/learn-forex/what-is-forex prepared for the possibility of tight monetary policy at that time. That could make financial markets much less forgiving of heavily-indebted, low-margin industry laggards like American Airlines. In the near term, American’s abundant liquidity will protect it from financial distress. But as the company works down its cash balance , it will have less margin for error.

American Airlines’ Debt Load

Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. American still had $12.5 billion of unrestricted cash and investments at the end of June, some of which will be available for additional aal stock price debt repayments. That said, it needs to generate a meaningful amount of free cash flow to meet its 2025 debt reduction target. There’s a path for American to turn this around, but they need everything to go right.

In the last few years before the pandemic struck, American Airlines only generated around $4 billion of cash from operations in a typical year. So, unless the carrier generates dramatically higher profits over the next few years than it did between 2017 and 2019, it will generate very little free cash flow. It could still reduce gross debt by perhaps $10 billion, mainly by using its $12.5 billion of cash and investments on hand. But barring further equity raises, net debt will likely remain near today’s level for the foreseeable future. Looking ahead to the third quarter, American Airlines currently expects fuel prices to moderate slightly to between $3.73 and $3.78 per gallon.

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