American Airlines: Zacks’ Bear of the Day Play

American Airlines (AALAnalyst Report) has beaten the Zacks Consensus Estimate rather consistently but the estimates have slipped and it is now a Zacks Rank #5 (Strong Sell) and today it is the Bear of the Day.The Numbers

AAL topped the Zacks Consensus Estimate of $1.96 by $0.04 for a 2% positive earnings surprise. Revenues came in a little below expectations at $9.63B for a 1% negative revenue surprise.

Description

American Airlines Group operates in the airline industry. The company provides scheduled passenger, freight and mail service. American Airlines Group is based in Fort Worth TX.

Earnings History

Usually when a stock is the Bear of the Day, the earnings history is filled with misses. This is not the case for AAL, as the stock has posted six straight beats.

Estimates

Here is the real reason the stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day. The Zacks Consensus Estimate has fallen in each of the last two months. The FY16 estimate stood at $6.96 in January but fell to $6.76 in February and is now down to $6.21 in April.

Next year is seeing an even larger move to the downside, with numbers sliding from $6.29 to $6.22 down to $6.00 over the same time period as mentioned above. That is the reason this stock is a Zacks Rank #5 (Strong Sell).

Chart

Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #5 (Strong Sell) we see that estimates are moving higher.

Follow Brian Bolan on twitter at @BBolan1

Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Stocks Under $10, an investor service , where he recommends the stocks in the portfolio.

Brian also runs the brand new Zacks Game Changers where he looks for stocks that are disrupting their industries and reaping big gains.

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