Current valuation Southwest Airlines (LUV) has a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 7.1x. This is the highest multiple among the major airline carriers and is higher than its average valuation of 6.3x since September 2008. Peer comparisons American Airlines (AAL) is trading at a similar valuation […]
American Airlines’ (AAL) capacity grew 3.2% year-over-year in August, significantly higher than its 0.4% year-over-year growth reported in the previous seven months.
AAL has paid little attention to its total debt, which rose from $20.8 billion at the end of 2015 to $24.3 billion at the end of 2016 and $24.5 billion at the end of 1Q17.
In the last week of June 2017, Qatar Airways’ CEO, Akbar Al Baker, disclosed the carrier’s interest in buying a 10% stake worth $808 million in American Airlines through the open market.
United Continental (UAL) is currently trading at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 5.8x.
As opposed to most other airlines that have been reducing their debts, American Airlines’ (AAL) debt has risen, partly due to its focus on completing its integration with US Airways.
Currently, American Airlines (AAL) is valued at 6.6x its forward EV-to-EBITDA ratio (enterprise value to earnings before interest, tax, depreciation, and amortization).
Airlines have long been known as capital destroyers. In times of profitability (such as now), they increase capacity to an extent that can’t be filled.
Berkshire Hathaway’s (BRK.B) November 2016 13F filing attracted considerable interest for airline investors. The 13F revealed Warren Buffett’s new investments in the airline sector—a sector he had written off during the past decade.
In November 2016, American Airlines’s (AAL) traffic fell 0.2% year-over-year, slightly lagging its capacity growth in the same period. Year-to-date, AAL’s traffic has increased 0.3%.
American Airlines’s (AAL) capacity grew 0.1% year-over-year in November 2016, similar to the growth seen during most of 2016. Year-to-date, AAL’s capacity has grown 1.9%.
As many as 30,000 pilots will reach the mandatory retirement age of 65 years by 2026. If there aren’t sufficient new hires to replace them, airlines could face a pilot shortage.
After 20 months of talks and a nine-month standoff, Delta Air Lines has finally managed to reach an agreement in principle with its pilots for a new contract.
Refiners such as PSX, MPC, VLO, and TSO are now focusing on diversifying their earnings models to shield themselves from the volatile refining environment.
AAL’s traffic growth has lagged capacity growth in most of 2016. The load factor has fallen by 0.9 percent points in 2016 YTD. This will pressure unit revenues.
Since the end of June, Marathon Petroleum’s (MPC) stock has risen by 28%. MPC has crossed over its 50-day and its 200-day moving averages during this period.
Tesoro is expected to post its 2Q16 results on August 3, 2016. Before we look at its 2Q16 estimates, let’s recap TSO’s 1Q16 performance compared to estimates.
Archer Daniels Midland (ADM) is slated to report its 2Q16 results on August 2 before the market opens. The stock has gained 12% since its last quarter results.
In 1Q16, PBF Energy’s revenues surpassed Wall Street analyst estimates by 12%. PBF’s 1Q16 adjusted EPS was -$0.65, as compared to the estimated -$0.47.
With respect to the price-to-earnings ratio, larger players Marathon Petroleum (MPC), Tesoro (TSO), and Phillips 66 (PSX) trade higher than the average valuations.
Valero’s diesel crack indicators have been rising in 2Q16 compared to 1Q16. The US West Coast, where VLO has 0.3 MMbpd refining capacity, saw the largest rise of $3.20 per barrel.
Rising oil prices are usually favorable for upstream segment earnings of integrated energy companies. Petrobas (PBR) stock has more than doubled since mid-February.
Royal Dutch Shell (RDS.A) released its 1Q16 results on May 4, 2016. Its revenues missed Wall Street analysts’ estimates by 13%, and its reported EPS stood at $0.14.
Western Refining’s adjusted EBITDA from the Western segment fell from $171 million in 1Q15 to $51 million in 1Q16 due to a decline in refining margins.
Three of ten companies surveyed have rated BP a “buy” or “outperform.” The highest 12-month price target for BP stands at $43, indicating a 26% rise from its current levels.
Royal Dutch Shell (RDS.A) is set to release its 1Q16 results on May 4, 2016. In this series, we’ll look at 1Q16 estimates, segment outlook, stock performance, capex, costs, and restructuring plans.
Suncor Energy (SU) has 462 Mbpd (thousand barrels per day) of refining capacity spread over Canada and the United States. The refineries are well-configured to consume oil sands feedstock.
Exxon Mobil Corporation (XOM) announced its results on February 2, 2016, before the market opened. Although XOM surpassed its estimates for 4Q15, the stock experienced a weak opening.
Valero expects capex to be ~$2.6 billion in 2016. The capex is aimed at increasing feedstock flexibility, higher value products, and sustaining growth.
Valero Energy’s stock price, amid volatility, has risen in 2015, and the stock gained by 43% in the trailing-twelve-month period as of January 19, 2016.
