Is American Airlines Stock a Bargain After Recent Share Price Rebound in 2025?

• Wondering if American Airlines Group is a bargain or a value trap at today’s price? Let us walk through what the numbers are really saying about the stock.
• After a bumpy year that has left the share price down roughly 17.5% over 12 months and 15.6% year to date, the stock has recently bounced about 2.9% in the last week and 13.4% over the last month, hinting that sentiment might be turning.
• Investors have been reacting to ongoing industry capacity shifts, route expansions and evolving demand for both business and leisure travel, all of which affect how efficiently American can use its fleet. There has also been renewed focus on balance sheet resilience and operational reliability as travelers and regulators scrutinize airline performance more closely.
• Right now, American Airlines Group scores a 4/6 valuation check, suggesting it appears undervalued on most, but not all, of our metrics. In the sections that follow, we look at discounted cash flow models, valuation multiples and asset-based perspectives, then finish with a more holistic way to think about the stock’s value.

Find out why American Airlines Group's -17.5% return over the last year is lagging behind its peers.

Approach 1: American Airlines Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model projects a company’s future cash flows and then discounts those projections back into today’s dollars, aiming to estimate what the business is truly worth right now.

For American Airlines Group, the latest twelve month Free Cash Flow is about $1.03 billion. Using a 2 Stage Free Cash Flow to Equity model, analysts and Simply Wall St project cash flows growing to around $2.27 billion by 2035, with nearer term forecasts such as $484 million in 2026 and $1.16 billion in 2028. Estimates after the first few years are extrapolated from earlier analyst expectations, reflecting a decelerating but still positive growth path as the business matures.

When these projected cash flows are discounted back, the intrinsic value is estimated at roughly $23.37 per share. Compared with the current market price, this implies the stock trades at about a 38.6% discount, suggesting investors are paying noticeably less than what the cash flow profile might justify.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests American Airlines Group is undervalued by 38.6%. Track this in your watchlist or portfolio, or discover 909 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for American Airlines Group.

Approach 2: American Airlines Group Price vs Earnings

For a company that is generating positive earnings, the Price to Earnings, or PE, ratio is often the most intuitive way to judge value because it connects what investors pay today with each dollar of current profit. In general, faster growth and lower perceived risk justify a higher “normal” PE, while slower or more volatile earnings usually deserve a lower multiple.

American Airlines Group currently trades on a PE of about 15.7x. That is well above the Airlines industry average of roughly 9.0x, but still below the broader peer group, which sits closer to 25.6x. To refine this comparison, Simply Wall St uses a proprietary Fair Ratio, which estimates what PE the stock should trade on given its growth profile, risks, profit margins, industry context and market cap.

On this basis, American’s Fair Ratio is about 23.5x. Because this framework adjusts for company specific strengths and weaknesses, it can be more informative than blunt peer or industry averages. Comparing the current 15.7x PE with the 23.5x Fair Ratio suggests the market is pricing American below what its fundamentals might warrant.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your American Airlines Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to link your view of a company’s story with a set of numbers such as future revenue, earnings, margins and a fair value estimate. A Narrative on Simply Wall St is an easy, accessible tool on the Community page that helps you turn your perspective on American Airlines Group into a concrete forecast and fair value, then compare that Fair Value to today’s Price to decide whether it looks like a buy, hold or sell. Narratives are dynamic, automatically updating when new information like earnings, news or guidance comes in, so your view stays current without you having to rebuild a model from scratch. For American Airlines, one Narrative might focus on its heavy debt and conclude fair value is around $10.61 per share. Another might emphasize loyalty growth and premium demand to justify a fair value closer to $15.07, showing how different stories can lead to very different decisions.

For American Airlines Group, here are previews of two leading American Airlines Group Narratives:

🐂 American Airlines Group Bull Case

Fair value: $15.07 per share

Implied undervaluation vs last close: -4.8%

Revenue growth assumption: 4.9%

• Expects steady demand recovery in core U.S. markets, supported by premium service upgrades, loyalty expansion and global alliances to lift revenue and margins.
• Sees structural tailwinds from the AAdvantage program and long term card partnerships, adding high margin, recurring cash flows.
• Models revenue growth around the mid single digits, margin expansion to roughly 2.9% and earnings of about $1.8 billion by 2028, leading to a fair value close to today’s price.

🐻 American Airlines Group Bear Case

Fair value: $10.61 per share

Implied overvaluation vs last close: 35.1%

Revenue growth assumption: 2.5%

• Highlights American’s highly leveraged balance sheet and negative equity as key risks that magnify any downturn in travel demand.
• Warns that softer demand and intense competition could squeeze margins further, leaving little room for error given the company’s debt load.
• Concludes the stock only looks appealing under a very optimistic economic backdrop, with more conservative assumptions pointing to a fair value well below the current price.

Do you think there's more to the story for American Airlines Group? Head over to our Community to see what others are saying!

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.

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