Yahoo Finance American Airlines Group (AAL) Likely to Beat Earnings in Q4 - Analyst Blog
We expect American Airlines Group (AAL) to report better-than-expected fourth-quarter 2014 earnings on Jan 27, 2015. Results will be declared prior to the commencement of trading on the day.
Why a Likely Positive Surprise?
Our proven model shows that the company is poised to beat earnings this quarter as it has the right combination of 2 key components:
Zacks ESP: The carrier currently has an Earnings ESP of +0.66%. This is because the Zacks Consensus Estimate is $1.51, while the Most Accurate Estimate stands higher at $1.52.
Zacks Rank: American Airlines Group carries a Zacks Rank #1 (Strong Buy). Note that stocks with Zacks Rank #1, 2 and 3 have a higher chance of beating earnings. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of American Airlines Group’s Zacks Rank #1 and +0.66% earnings ESP makes us confident of an earnings beat at the company.
What's Driving the Better-than-Expected Earnings?
American Airlines Group, created following the merger of American Airlines and U.S. Airways Group Inc., has a healthy track record with respect to earnings. The company has delivered positive earnings surprises in each of the last four quarters, with an average beat of 47.88%. The company, like many of its peers in the industry, is benefiting considerably from persistent weak oil prices. American Airlines Group’s results in the final quarter of the year are also likely to benefit from low fuel costs. This is because fuel costs account for a major chunk of an airline's operating expenses. Consequently, cheaper oil price should boost the company’s bottom-line in the quarter.
Moreover, the carrier projects consolidated passenger revenue per available seat mile or PRASM (a measure of unit revenue) for the final quarter of 2014 to be approximately flat to down 2%.
Most importantly, American Airlines Group has witnessed upward revisions in earnings estimates. The Zacks Consensus Estimate for the fourth-quarter has moved north by 17.1% over the last 90 days.
Other Stocks to Consider
American Airlines Group is not the only carrier looking up this earnings season. The following airline stocks are also likely to beat earnings in the upcoming quarter:
JetBlue Airways Corporation (JBLU): The carrier will unveil its fourth quarter earnings numbers on Jan 29, before market opens. The company carries a Zacks Rank #1 and has an earnings ESP of +4.35%.
Hawaiian Holdings, Inc. (HA), the parent company of Hawaiian Airlines, will release fourth quarter earnings results on Jan 29, after market closes. The company carries a Zacks Rank #1 and has an earnings ESP of +10.53%.
Spirit Airlines, Inc. (SAVE) has a Zacks Rank #2 (Buy) and an earnings ESP of +2.60%. The company is expected to report fourth-quarter 2014 earnings on Feb 18.
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