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American airlines (AAL) is a Zacks Rank #5 (strong sell) and it is the bear of the day today. I know what you’re thinking… won’t there be stimulus soon that will help airlines? Won’t that help drive up the stock price? Well, I hope so! And I hope that those who need it will receive this stimulus as soon as possible.
It’s the bear of the day, and it’s definitely a chance for someone to realize that the Zacks Ranking is all about earnings estimate revisions and not a headline-focused recommendation. I know from wiring experience for the past few years that a lot of people don’t understand rank and what it does and if AAL pops up on Monday I just look like an idiot.
How could a skyrocketing stock be the bear of the day?
Well, the Bull and Bear is written the day before and if we really knew which stocks would go up and down the most, would we give it away for free? The articles are more about showing why a stock is Zacks Rank #1 (Strong Buy) or in this case Zacks Rank #5 (Strong Sell).
Missed gains
The past two quarters have been impacted by COVID, but Wall Street knew it was. Even so, estimates were still too high, with the March quarter falling 49 cents below expectations for a 22% negative surprise.
The June quarter was $1.07 lower than expected for a 15% negative earnings surprise.
Earnings reports have a small impact on the Zacks ranking…but what really moves the rankings are the forward earnings estimates.
Estimates drop for AAL
After the recent failure, the numbers got worse and worse.
The current quarter saw a small improvement of 9 cents over the past 670 days, but the following quarter saw a decline of 20 cents.
The Zacks ranking is most heavily influenced by the full year numbers and I see 2020 going from a loff of $15 and down to a loss of $18 and now down to a loss of $19.03.
The next year saw an increase in the expected loss, from $2.19 to $3.37.
Investors do not want to see losses increase.
Graphic
American Airlines Group Inc. Pricing and Consensus
American Airlines Group Inc. Price Consensus Chart | American Airlines Group Inc. Quote
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American Airlines Group Inc. (AAL): Free Inventory Analysis Report
