How Does Wall Street View American Airlines?
Out of the total analysts surveyed by Bloomberg, 64.7% of analysts have a “buy” rating on American Airlines, ~35.3% of the analysts have a “hold” rating, and no analysts have a “sell” rating.
American Airlines’ traffic increased 5.0% YoY to 20.01 billion, and its carrying capacity increased by 2.7% to 24.30 billion.
American Airlines’ 2Q15 revenues fell by 4.6% YoY to $10.83 billion due to weakness in the company’s key markets. Analysts estimated that revenues would be ~$10.86 billion.
AAL trades at a price-to-earnings multiple of 5.16x, which is a considerable discount with its peer average and the S&P 500 multiples.
In 2Q15, most hedge funds that had significant exposure to American Airlines either lowered their stakes or kept their positions steady in the company. AAL’s shares lost approximately 26.5% in value.
This series covers institutional investors’ activity in airline stocks in 2Q15, focusing on American Airlines Group. The majority of asset managers were net bearish on airlines.
Of the 20 Wall Street analysts covering the stock, 13 have rated Southwest Airlines a “buy,” and three have rated it a “sell.”
Southwest Airlines’ traffic report for August saw growth in key indicators such as revenue passenger miles (or RPM) and available seat miles (or ASM).
Southwest Airlines (LUV) reported revenue growth of 1.9% year-over-year to $5.1 billion. That was below analyst expectations of $5.3 billion.
Over the last three years, Southwest has been able to grow both its revenues and earnings meaningfully, facilitated by the low fuel price environment and prudent capacity management.
Among hedge funds that made significant buys in 2Q15 was value investor Cliff Asness’s AQR Capital Management. It increased its stake in LUV by ~4 million shares to 9.7 million shares.
2Q15 institutional investor filings show the vast majorty of asset managers weren’t bearish on airlines such as Southwest Airlines (LUV). Publicly traded US airline stocks have collectively lost 7.43% to date.
As of September 14, 2015, JPMorgan Chase maintained an “overweight” rating for Delta Air Lines (DAL), with a revised target price of $72, which is up by $0.50.
Delta Air Lines expects its situation to ease by 1Q15, when it can reap the benefits of declining oil prices, fleet restructuring, and cost-saving initiatives.
Delta Air Lines (DAL) reported strong quarterly numbers for 2Q15. Despite a $160 million hit from foreign exchange rates, the company’s revenues grew by 1% year-over-year to $10.7 billion.
Delta Air Lines has traded at a discount to its peers over the last five-year period. With a debt-to-equity ratio of 0.8x, DAL’s leverage is somewhat elevated in comparison to its peers.
Ken Griffin’s quantitative hedge fund, Citadel, increased its stake in Delta Air Lines by a whopping 228% to 8.2 million shares in 2Q15.
Delta Air Lines saw additions to or new positions in the portfolios of 360 institutional investors in 2Q15 against position decreases or liquidations from 418 asset management companies.
If dry bulk demand picks up, Star Bulk Carriers (SBLK) with its large fleet would be in a position to capitalize on the upswing.
The BDI (Baltic Dry Index) is a leading indicator for the bulk shipping industry. It’s a measure of the cost of shipping major bulk commodities on a number of shipping routes.