NasdaqGS:AAL

Stock Analysis Report

Executive Summary

American Airlines Group Inc., through its subsidiaries, operates as a network air carrier.

Rewards

Trading at 70.8% below its fair value

Earnings are forecast to grow 14.65% per year

Earnings grew by 216% over the past year

Risk Analysis

Debt is not well covered by operating cash flow

Unstable dividend track record

Large one-off items impacting financial results



Snowflake Analysis

Undervalued with acceptable track record.


Similar Companies

Spirit Airlines

NYSE:SAVE

Share Price & News

How has American Airlines Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: AAL has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-2.7%

AAL

-2.6%

US Airlines

-1.3%

US Market


1 Year Return

-21.0%

AAL

8.8%

US Airlines

22.0%

US Market

Return vs Industry: AAL underperformed the US Airlines industry which returned 14.4% over the past year.

Return vs Market: AAL underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

AALIndustryMarket
7 Day-2.7%-2.6%-1.3%
30 Day-2.8%-0.7%1.6%
90 Day-11.9%0.09%8.9%
1 Year-20.0%-21.0%10.5%8.8%24.7%22.0%
3 Year-39.3%-41.1%10.5%6.1%49.4%39.7%
5 Year-40.8%-43.7%26.0%18.8%78.1%58.5%

Price Volatility Vs. Market

How volatile is American Airlines Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is American Airlines Group undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: AAL ($27.53) is trading below our estimate of fair value ($94.26)

Significantly Below Fair Value: AAL is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: AAL is good value based on its PE Ratio (7.8x) compared to the Airlines industry average (9.2x).

PE vs Market: AAL is good value based on its PE Ratio (7.8x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: AAL is good value based on its PEG Ratio (0.5x)


Price to Book Ratio

PB vs Industry: AAL is overvalued based on its PB Ratio (75.4x) compared to the US Airlines industry average (1.7x).


Next Steps

Future Growth

How is American Airlines Group forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

13.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AAL's forecast earnings growth (14.7% per year) is above the savings rate (1.7%).

Earnings vs Market: AAL's earnings (13.3% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: AAL's earnings are forecast to grow, but not significantly.

Revenue vs Market: AAL's revenue (4.1% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: AAL's revenue (4.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: AAL's Return on Equity is forecast to be very high in 3 years time (79.4%).


Next Steps

Past Performance

How has American Airlines Group performed over the past 5 years?

-25.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AAL has a large one-off loss of $730.0M impacting its September 30 2019 financial results.

Growing Profit Margin: AAL's current net profit margins (3.5%) are higher than last year (1.1%).


Past Earnings Growth Analysis

Earnings Trend: AAL's earnings have declined by -25.2% per year over the past 5 years.

Accelerating Growth: AAL's earnings growth over the past year (216%) exceeds its 5-year average (-25.2% per year).

Earnings vs Industry: AAL earnings growth over the past year (216%) exceeded the Airlines industry -14.4%.


Return on Equity

High ROE: Whilst AAL's Return on Equity (997.5%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is American Airlines Group's financial position?


Financial Position Analysis

Short Term Liabilities: AAL's short term assets ($9.6B) do not cover its short term liabilities ($19.6B).

Long Term Liabilities: AAL's short term assets ($9.6B) do not cover its long term liabilities ($41.5B).


Debt to Equity History and Analysis

Debt Level: AAL's debt to equity ratio (15349.4%) is considered high.

Reducing Debt: AAL's debt to equity ratio has increased from 336.8% to 15349.4% over the past 5 years.

Debt Coverage: AAL's debt is not well covered by operating cash flow (16%).

Interest Coverage: AAL's interest payments on its debt are well covered by EBIT (3.9x coverage).


Balance Sheet

Inventory Level: AAL has a high level of physical assets or inventory.

Debt Coverage by Assets: AAL's debt is not covered by short term assets (assets are 0.4x debt).


Next Steps

Dividend

What is American Airlines Group's current dividend yield, its reliability and sustainability?

1.45%

Current Dividend Yield


Upcoming Dividend Payment

Purchase American Airlines Group before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.4%marketbottom25%1.4%markettop25%3.7%industryaverage2.0%forecastin3Years1.5%

Current dividend yield vs market & industry

Notable Dividend: AAL's dividend (1.45%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: AAL's dividend (1.45%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, AAL has been paying a dividend for less than 10 years.

Growing Dividend: AAL has only been paying a dividend for 5 years, and since then payments have not increased.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (11.3%), AAL's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: AAL's dividends in 3 years are forecast to be thoroughly covered by earnings (7.1% payout ratio).


Next Steps

Management

What is the CEO of American Airlines Group's salary, the management and board of directors tenure and is there insider trading?

6.1yrs

Average management tenure


CEO

Doug Parker (57yo)

6.1yrs

Tenure

US$11,999,517

Compensation

Mr. William Douglas Parker, also known as Doug, has been the Chief Executive Officer and Chairman of American Airlines, Inc. (US) since 2013. Mr. Parker has been Chief Executive Officer of American Airline ...


CEO Compensation Analysis

Compensation vs Market: Doug's total compensation ($USD12.00M) is about average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Doug's compensation has been consistent with company performance over the past year.


Management Age and Tenure

6.1yrs

Average Tenure

54.5yo

Average Age

Experienced Management: AAL's management team is seasoned and experienced (6.1 years average tenure).


Board Age and Tenure

6.1yrs

Average Tenure

61.5yo

Average Age

Experienced Board: AAL's board of directors are considered experienced (6.1 years average tenure).


Insider Trading

Insider Buying: AAL insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUS$314,07028 Oct 19
James Albaugh
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares10,000
Max PriceUS$31.41
BuyUS$65,84430 Aug 19
Robert Isom
EntityIndividual
Role
President
President
Shares2,500
Max PriceUS$26.34
BuyUS$112,72005 Aug 19
Michael Embler
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares4,000
Max PriceUS$28.18
SellUS$201,74305 Aug 19
Ray Robinson
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares6,930
Max PriceUS$29.11
BuyUS$714,97305 Jun 19
John Cahill
EntityIndividual
Role
Lead Director
Lead Independent Director
Shares25,000
Max PriceUS$28.60
BuyUS$1,404,28504 Jun 19
William Parker
EntityIndividual
Role
Chief Executive Officer
Chairman & CEO
Shares50,000
Max PriceUS$28.09
BuyUS$416,25004 Jun 19
Robert Isom
EntityIndividual
Role
President
President
Shares15,000
Max PriceUS$27.75
BuyUS$138,58204 Jun 19
Stephen Johnson
EntityIndividual
Role
Senior Key Executive
Executive Vice President of Corporate Affairs
Shares5,000
Max PriceUS$27.72
BuyUS$138,15004 Jun 19
Maya Leibman
EntityIndividual
Role
Chief Information Officer
Executive VP & Chief Information Officer
Shares5,000
Max PriceUS$27.63
BuyUS$138,82004 Jun 19
Elise Eberwein
EntityIndividual
Role
Head of Corporate Communications
Executive Vice President of People & Communications
Shares5,000
Max PriceUS$27.76
BuyUS$138,82004 Jun 19
Derek Kerr
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares5,000
Max PriceUS$27.76

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Doug Parker (57yo)

    Chairman & CEO

    • Tenure: 6.1yrs
    • Compensation: US$12.00m
  • Steve Johnson (62yo)

    Executive Vice President of Corporate Affairs

    • Tenure: 6.1yrs
    • Compensation: US$3.90m
  • Elise Eberwein (53yo)

    Executive Vice President of People & Communications

    • Tenure: 6.1yrs
  • Robert Isom (55yo)

    President

    • Tenure: 3.4yrs
    • Compensation: US$6.69m
  • Derek Kerr (54yo)

    Executive VP & CFO

    • Tenure: 6.1yrs
    • Compensation: US$3.85m
  • David Seymour

    Senior Vice President of Operations

    • Tenure: 0.08yrs
  • Maya Leibman (52yo)

    Executive VP & Chief Information Officer

    • Tenure: 8yrs
    • Compensation: US$3.86m
  • Bruce Wark

    VP & Deputy General Counsel

    • Tenure: 5.3yrs
  • Alison Taylor

    Senior Vice President of Global Sales & Distribution

    • Tenure: 3.3yrs
  • Daniel Cravens

    Managing Director of Investor Relations


    Board Members

    • Matt Hart (67yo)

      Independent Director

      • Tenure: 6.1yrs
      • Compensation: US$316.91k
    • Doug Parker (57yo)

      Chairman & CEO

      • Tenure: 6.1yrs
      • Compensation: US$12.00m
    • Jim Albaugh (69yo)

      Independent Director

      • Tenure: 6.1yrs
      • Compensation: US$291.52k
    • John Cahill (62yo)

      Lead Independent Director

      • Tenure: 6.1yrs
      • Compensation: US$347.89k
    • Denise O’Leary (61yo)

      Independent Director

      • Tenure: 6.1yrs
      • Compensation: US$311.75k
    • Ray Robinson (71yo)

      Independent Director

      • Tenure: 6.1yrs
      • Compensation: US$306.25k
    • Jeff Benjamin (58yo)

      Independent Director

      • Tenure: 6.1yrs
      • Compensation: US$320.35k
    • Sue Kronick (67yo)

      Independent Director

      • Tenure: 4.2yrs
      • Compensation: US$308.89k
    • Mike Embler (55yo)

      Independent Director

      • Tenure: 6.1yrs
      • Compensation: US$302.44k
    • Marty Nesbitt (57yo)

      Independent Director

      • Tenure: 4.2yrs
      • Compensation: US$321.03k

    Company Information

    American Airlines Group Inc.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: American Airlines Group Inc.
    • Ticker: AAL
    • Exchange: NasdaqGS
    • Founded: 1934
    • Industry: Airlines
    • Sector: Transportation
    • Market Cap: US$12.108b
    • Shares outstanding: 438.06m
    • Website: https://www.aa.com

    Number of Employees


    Location

    • American Airlines Group Inc.
    • 1 Skyview Drive
    • Fort Worth
    • Texas
    • 76155
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    AALNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDDec 2013
    AAL *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNDec 2013
    A1GDB (Deutsche Boerse AG)YesCommon StockDEEURDec 2013
    A1GXTRA (XETRA Trading Platform)YesCommon StockDEEURDec 2013
    AALWBAG (Wiener Boerse AG)YesCommon StockATEURDec 2013
    A1GSWX (SIX Swiss Exchange)YesCommon StockCHCHFDec 2013
    A1GETLX (Eurotlx)YesCommon StockITEURDec 2013
    0HE6LSE (London Stock Exchange)YesCommon StockGBUSDDec 2013
    AALL34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EA REPR 1 COM SHS USD1BRBRLSep 2016

    Biography

    American Airlines Group Inc., through its subsidiaries, operates as a network air carrier. It provides scheduled air transportation services for passengers and cargo. As of December 31, 2018, the company operated a mainline fleet of 956 aircraft. It serves 350 destinations in approximately 50 countries, principally from its hubs in Charlotte, Chicago, Dallas/Fort Worth, London Heathrow, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C. The company was formerly known as AMR Corporation and changed its name to American Airlines Group Inc. in December 2013. American Airlines Group Inc. was founded in 1934 and is headquartered in Fort Worth, Texas. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/26 00:43
    End of Day Share Price2020/01/24 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.