American Airlines Group Inc. (NASDAQ:AAL) Just Reported First-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

American Airlines Group Inc. (NASDAQ:AAL) came out with its first-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Revenues were in line with expectations, at US$13b, while statutory losses ballooned to US$0.48 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on American Airlines Group after the latest results.

See our latest analysis for American Airlines Group

Taking into account the latest results, the consensus forecast from American Airlines Group's 16 analysts is for revenues of US$55.6b in 2024. This reflects a modest 4.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 196% to US$2.26. Before this earnings report, the analysts had been forecasting revenues of US$55.3b and earnings per share (EPS) of US$2.33 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$17.59, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic American Airlines Group analyst has a price target of US$24.00 per share, while the most pessimistic values it at US$12.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that American Airlines Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.0% growth on an annualised basis. This is compared to a historical growth rate of 8.0% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.6% annually. Factoring in the forecast slowdown in growth, it looks like American Airlines Group is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$17.59, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for American Airlines Group going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - American Airlines Group has 4 warning signs (and 2 which shouldn't be ignored) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.