Can Its 5.2% Jump Turn into More Strength?

American Airlines (AAL) shares ended the last trading session 5.2% higher at $13.51. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock’s 25.7% loss over the past four weeks.

It is no secret that the upsurge in oil price, following the invasion of Ukraine by Russia, is hurting airline stocks with American Airlines being no exception. Evidently, shares of AAL declined 12% on Mar 7 from the Mar 4 closing as price of oil touched the highest level since 2008. However, AAL shares bounced back the next day and climbed 5.2%. The rebound on Mar 8 was owing to investors hoping that despite the oil price explosion, air-travel demand would remain strong in summer and spring.

This world’s largest airline is expected to post quarterly loss of $2.43 per share in its upcoming report, which represents a year-over-year change of +43.8%. Revenues are expected to be $8.52 billion, up 112.5% ​​from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For American Airlines, the consensus EPS estimate for the quarter has been revised 7.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn’t usually translate into price appreciation. So, make sure to keep an eye on AAL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>

American Airlines belongs to the Zacks Transportation – Airline industry. Another stock from the same industry, Spirit (SAVE), closed the last trading session 3.5% higher at $19.24. Over the past month, SAVE has returned -27%.

For Spirit , the consensus EPS estimate for the upcoming report has changed -43.3% over the past month to -$1.08. This represents a change of +56.5% from what the company reported a year ago. Spirit currently has a Zacks Rank of #3 (Hold).

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