Out Fox The $treet

  American Airlines' stock is near yearly lows despite the airline returning to producing massive profits. Higher fuel prices are a concern for the market, but they don't significantly impact the airline's ability to generate substantial profits. The stock is far too cheap trading at only 4.5x EPS targets while industrial transport peers trade at 3x the PE multiple. Despite the airlines returning to massive profits over the last year,  American Airlines Group  ( NASDAQ: AAL ) is back to near yearly lows. One prime reason for the weakness is higher fuel prices constantly feared by the market for  no rational reason pushing the valuation far below industrial transport peers. My  investment thesis  remains ultra Bullish on the airline due to the cheap valuation from the irrational dip in the stock back below $14. Read the full article on Seeking Alpha.  Disclosure: Long AAL. Please read the disclaimer page for more details. 

Updated - Apr. 11, 2023 Delta Air Lines (DAL) guides up for Q2 and '23, yet the market yawns. American Airlines again fell on the strong guidance from the airline.  -“Delta is building momentum, with the best people in the industry generating nearly $5B of operating profit over the last twelve months,” CEO Ed Bastian said. “For the June quarter, we expect to deliver record revenue, and an adjusted operating margin of 14 to 16 percent with earnings per share of $2.00 to $2.25. With solid March quarter profitability and a strong outlook for the June quarter, we are confident in our full-year guidance for revenue growth of 15 to 20 percent year over year, earnings of $5 to $6 per share and free cash flow of over $2B.” -The consensus EPS forecast for the second quarter stood at $1.64 while full-year forecasts were pegged at $5.37. The 15% to 20% revenue growth guide is also well above the 10.56% consensus. Original article posted on April 7.  American Airlines won't be harmed by h...

This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »   Update - Jan. 13 Comical that $ AAL  is down on this guidance from $ DAL . Delta lost a lot of money last Q1 and the airline is still guiding to a $7+ EPS in 2024. The stock should hit $100 next year, yet investors aren't sure whether to pay $40 fro Delta... pure insanity.  -Delta Air Lines (NYSE:DAL) stock slipped in premarket trading on Friday after the carrier offered lighter than expected Q1 EPS guide. -For the fourth quarter reported on Friday, the Atlanta-based airline posted $1.48 in adjusted earnings per share and $13.44, both of which cruised past the analyst consensus. The carrier also noted an adjusted operating operating margin of 11.6% for the quarter and $10.89B in passenger revenue, above the $10.6B consensus expectation. -“As we move into 2023, the industry backdrop for air travel remains favorable and Delta is well positioned to d...

American Airlines has over $17 billion in liquidity to survive the current air passenger traffic crash. The company has billions in unencumbered assets and a very valuable loyalty program as additional collateral for more funding. May 8th passenger traffic was up over 25% to the highest level since March 25. The market continues to misunderstand daily cash burn rates making the stock a buy at $10. The story of the day for  American Airlines Group  ( AAL ) is that the airline now has breathing room. With the government aid, the company has the liquidity to survive as passenger traffic continues to grow on a weekly basis even faster than ridesharing. The market remains highly fearful due to negative headlines such as Warren Buffett selling shares, but my  investment thesis  is even more bullish here. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details. 

More evidence continues to show that the strikes on Saudi oil facilities actually came from Iranian missles, not Yemen drones. Not even sure, if it matters, because the whole world knows that Iran was involved.  Dion Nissenbaum ✔ @DionNissenbaum US looking to declassify satellite imagery to bolster contentions that Iran was origin of weekend attack on Saudi oil industry as mounting evidence points to cruise missiles fired from Iran or Iraq, not Houthi drones launched from Yemen: https://www. wsj.com/articles/iran- rejects-u-s-accusations-over-saudi-oil-facility-attacks-11568544181?mod=hp_lead_pos1  … w/ @ summer_said Iran Rejects U.S. Accusations Over Saudi Oil-Facility Attacks Iran denied American accusations that it was behind Saturday’s strikes on Saudi oil facilities, as the kingdom rushed to contain the fallout from attacks that could disrupt global petroleum supplies. wsj.com 437 8:35 AM - Sep 15, ...

American Airlines has been beaten down this last year as investors incorrectly focus on net debt levels. Reduced capital expenditures and pension payments will free up around $3 billion in additional cash flows. The stock trades at half the P/S multiple of Delta Air Lines. The airline is in the middle of a $4.2 billion initiative to improve revenues and lower costs. The amazing decline in   American Airlines Group   ( AAL ) has left the stock at such a discount to the sector that a major Wall Street analyst actually called the stock undervalued due to the simple   P/S multiple . The airline has a lot more going on to support owning the stock, but an easy bull case always helps. Read the full article on Seeking Alpha.  Disclosure: Long AAL, UAL. Please review the disclaimer page for more details. 

The airline stocks took a hit today due to some weaker than forecast numbers from Southwest Airlines (LUV) . Investors need to avoid the urge to dump airlines like American Airlines Group (AAL) and United Airlines (UAL) .

The question investors need to ask is why are they sold the legacy airlines based on one number and not the complete picture. This interview with the Delta Air Lines (DAL) CEO should've had investors rushing back into the stock today. Ironically though, the stocks didn't gain until oil prices rose. My Net Payout Yields portfolio continues to hold American Airlines Group (AAL) and United Airlines (UAL) due to massive stock buybacks. These dips in the sector are actually good for those stocks. The cheaper the better for the stock buyback plans. Disclosure: Long AAL and UAL. Please review the disclaimer page for more details. 

Jamie Baker, JPMorgan Chase senior airline analyst, discusses how the airlines are fundamentally different now. The market continues of focus on every hurdle while the legacy stocks are extremely cheap. One can almost throw a dart at Delta Air Lines (DAL) , American Airlines Group (AAL) , and United Airlines (UAL) and win at these levels. Watch him take down the CNBC host on baggage fees. Disclosure: Long AAL. Please review the disclaimer page for more details. 

Airline stocks were beaten down last week on fears of a DOJ probe. The data suggests the probe is without merit, especially considering the PRSAM drop during Q2 for American Airlines. The airline sector remains incredibly beaten down, with American Airlines trading at a PE multiple of only 5. After an already weak year, airline stocks were beaten down last week by a probe from the Department of Justice, or DOJ. Anybody who owns an airline stock, and especially American Airlines Group (NASDAQ: AAL ) , is likely flabbergasted heading into the July 4th holiday weekend. The thought that American Airlines is colluding on capacity appears preposterous based on the big battle going on in Dallas between Southwest Airlines (NYSE: LUV ) and Virgin America (NASDAQ: VA ) . Read the full article at Seeking Alpha. Disclosure: Long AAL. Please review the disclaimer page for more details.

The airline sector reached new 2015 lows. IATA raised the projections for 2015 airline profits. Raymond James downgrades hit the legacy airline stocks hard, but the forecasts are actually very bullish for the stocks. At the same time that the IATA dramatically raised its estimate for global airline profits, an analyst firm downgraded the legacy airline stocks crashing them to recent lows. While some capacity concerns have propped up this year, one has to wonder why so much fear exists in stocks trading at exceptionally low PE multiples. Read the full article on Seeking Alpha. Disclosure: Long AAL. Please review the disclaimer page for more details. 

Summary American Airlines reported record Q1 profits and margins. The airline forecast record margins approaching 20% during Q2 despite several strong headwinds. American remains the cheapest stock in the industry and the sector in general. Not many stocks in the market trade substantially below market multiples, beat analyst estimates and forecast record Q2 margins. That's the case for most airlines and especially American Airlines Group (NASDAQ: AAL ) . Are the airlines still trading at low multiples due to the reality of the competitive sector or a perception of the past that won't go away? Read the full article at Seeking Alpha. Disclosure: Long AAL. Please review the disclaimer page for more details. 

Summary American Airlines stock is down due to weak January traffic numbers. The airline expects to generate attractive margins of at least 12% despite the disappointing traffic. American accelerated the original stock buyback and authorized $2 billion more to spend due to the extremely cheap stock. The January traffic numbers for American Airlines Group (NASDAQ: AAL ) were far from exciting, yet plenty of reasons exist to continue loading up on the stock. The stock continues selling off with momentum traders dumping the airline regardless of the incredible valuation it offers. Investors should consider the following reasons for buying the stock now. Read the full article at Seeking Alpha. Disclosure: Long AAL. Please review the disclaimer page for more details. 

Summary American Airlines to benefit from reduced fuel costs and consumption. American Airlines won't face income tax payments until 2016, at the current income level. The stock is extremely cheap with the above tailwinds helping offset any global slowdown concerns. Typically people focus on two certainties in life: death and taxes. For an airline like American Airlines Group (NASDAQ: AAL ) , the certainties are fuel and taxes. Fuel accounts for the largest expense line for airlines. The ability to lower fuel consumption or the cost per gallon will have a material impact to the bottom line. For taxes, the airlines are entering a new era of dealing with income taxes after decades of loses that eliminated the need to pay the government. Read the full article at Seeking Alpha. Disclosure: Long AAL. Please review the disclaimer page for more details. 

As part of its bankruptcy agreement, American Airlines Group ( NASDAQ: AAL     ) had to distribute a large amount of shares to creditors and labor groups around the 120th day following the finalization of the US Airways merger. The company's stock had already survived a few smaller distributions, but the large distribution in early April but more pressure on it. Whether due to the general market weakness or the stock distribution, the stock dropped from a high of $38 in early April to a bottom of $32. While a substantial increase in the amount of shares available to be sold by creditors and labor unions might have pressured the stock short term, most stocks eventually trade based on the fundamentals of the company and the industry. Read the full article here . Disclosure: Long AAL. Please read the disclaimer page for more details.

It seems as though every month the improving fundamentals in the airline sector make it worth scouring the group for a cheap pick. Inevitably, United Airlines ( NYSE: UAL     ) pops up on the list with either a low price-to-sales multiple or a lagging stock price. Every time, though, the numbers just don't justify buying the stock. United Airlines is now the second-largest domestic airline in terms of revenue behind the new American Airlines Group ( NASDAQ: AAL     ) . United operates more than 5,300 flights a day to more than 360 airports across six continents. Read the full article here . Disclosure: Long AAL. Please review the disclaimer page for more details. 

With the stock getting hit today, it's worth a refresher on the valuation of American Airlines (AAL). Sure the stock has jumped from $24 to $36 since the merger with U.S. Airways was competed back in December, but the new airline expects to make nearly $6 next year. With the stock trading at only 6x earnings expectations, it still trades like the old airlines that faced extreme competition and wouldn't have been this profitable in the first place. Why shouldn't a healthy industry trade at a multiple of 10x earnings, at least? The only disagreement is that Cramer says the deal shouldn't have been approved, but I tend to disagree. The U.S. needs a healthy airline industry in order to update facilities and expand and the only way this is possible was via consolidation. The country now has 3 legacy airlines along with a very strong Southwest Airlines (LUV) . Cramer might be correct about several routes lacking competition, but the discount airlines will work over the next...

In the monthly release of traffic data, American Airlines Group ( AAL ) reported solid February results despite a brutal winter. In the past, a bad weather would've sent the airline industry into a tailspin, but this isn't your fathers airline industry anymore. American Airlines Group is a massive airline after merging American Airlines and US Airways back in December. The combination hasn't skipped a beat even in the face of extreme weather that could've disrupted or even crippled operations of a badly operated airline. Read the full article on Seeking Alpha. Disclaimer: Long AAL. Please review the disclaimer page for more details. 

After recently finalizing the merger between U.S Airways and AMR Corp., the December traffic results were the first operational release of the new American Airlines Group ( NASDAQ: AAL     ) . Investors were naturally able to add the individual traffic numbers together, but this release provides more convenience and gave a glimpse to whether the merger is already providing any benefits. Considering both that  Delta Air Lines ( NYSE: DAL     ) and United Airlines ( NYSE: UAL     ) had already provided traffic results for December, some of the positive numbers weren't a surprise. Investors need to recall that November's numbers were weak due to the return trip from the Thanksgiving holiday. The associated revenue and traffic numbers were counted for December. Read the full article here . Disclosure: Long AAL. Please review the disclaimer page for more details. 

Interesting video from American Airlines (AAMRQ) uploaded to YouTube saying the merger is "cleared for takeoff". Anybody following this blog knows that Stone Fox Capital has been bullish on this merger with an investment in US Airways (LCC) . As the largest airline in the world, the new American Airlines Group (LCC ) should eventually claim the largest valuation as well. Disclosure: Long LCC. Please review the disclaimer page for more details.