American Airlines (AAL) stock is selling off Thursday as the air carrier's weak outlooks for the first quarter and full year offset its top- and bottom-line fourth-quarter beats.
In the three months ending December 31, American Airlines' revenue increased 4.6% year over year to $13.7 billion. Its earnings per share (EPS) nearly tripled from the year-ago period to 86 cents.
"The American Airlines team achieved a number of important objectives in 2024," said CEO Robert Isom in a statement. "We continue to run a reliable operation, and we are reengineering the business to build an even more efficient airline. That, coupled with our commercial actions, resulted in strong financial performance in the fourth quarter."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
American Airlines' results beat analysts' expectations. Specifically, Wall Street was anticipating revenue of $13.4 billion and earnings of 64 cents per share, according to CNBC.
However, the positive sentiment around the earnings beat faded when AAL provided its outlook. Here's what the company expects to achieve:
| Metric | Q1 2025 | FY 2025 |
| Revenue growth | 3% to 5% | 4.5% to 7.5% |
| Earnings (loss) per share | ($0.20) to ($0.40) | $1.70 to $2.70 |
Analysts were anticipating a loss of just 4 cents per share in the first quarter and earnings of $2.42 per share for the full fiscal year, according to MarketWatch.
Is American Airlines stock a buy, sell or hold?
Heading into Thursday's session, American Airlines was up 37% year over year, outpacing the S&P 500's 27% total return (price change plus dividends). And analysts are generally bullish on the industrial stock.
According to S&P Global Market Intelligence, the average analyst target price for AAL stock is $20.24, representing an upside of nearly 15% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Jefferies is one of those with a Buy rating on the large-cap stock, along with a $20 price target.
"AAL's strategy concentrates on its short-haul network, comprising 75% of available seat miles (ASMs), with focus on the medium and small markets that can be ideally served by its regional fleet and its pilot scope clause," wrote Jefferies analyst Sheila Kahyaoglu in a January 6 note.
The analyst notes that these markets "offer connectivity to AAL's domestic Sun Belt hubs and enable the international network," which contrasts to America Airlines' network peer strategies that focus on large, coastal hubs.
Kahyaoglu adds that "ongoing corporate share recapture, lower capacity and capital expenditures, and a new credit card deal mean AAL could see significant surprise to the upside in 2025."
Related Content
-
How to Budget for College Expenses Beyond TuitionSome universities waive tuition for families with incomes below a certain threshold. But you'll still need a plan to cover other costs.
-
Retire in Costa Rica for Expat HeavenWhen you retire in Costa Rica, you get natural beauty, ease of relocation and affordability. Will you become a part of its thriving expat community?
-
My First $1 Million: Events Industry CEO, 65, Northern New JerseyEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Stock Market Today: Investors Look on the Bright SideA generally good week closes on another positive note, as investors, traders and speculators look for fresh catalysts.
-
My Three-Day Rule for Investing: And If it Applies NowStock Market I've seen a lot in my career. Here's what I see now in the stock market.
-
Such Attractive Yields in High-Grade Munis Are Rare and May Not Last LongAccording to this munis expert, the last time munis were this cheap was a brief period in 2023. If you kicked yourself for missing out then, you have a second chance now.
-
Financial Analyst Sees a Bright Present for Municipal Bond InvestorsHigh-tax-bracket investors have an excellent opportunity to secure low-volatility, high-quality returns at yield levels rarely seen in over a decade.
-
I'm an Insurance Pro: How Not to Get Dumped by Your Insurance AgentYour insurance agent or broker might show you the door if you do any of these five things. Being a good customer is about more than paying your bill on time.
-
Stock Market Today: Stocks Climb More Walls of WorryVolatility is back in a normal range, and the trend for the main equity indexes remains positive despite specific and general headwinds.
