American Airlines Group Inc. (NASDAQ: AAL) stock price shed around 56% from $32 in 2018 end to $14 currently, primarily due to unfavorable changes in its P/S multiple. Additionally, the company witnessed a drop in its sales over this period, and combined with a rise in the outstanding share count, its revenues per share also decreased. Due to this, the stock has strongly underperformed the S&P, which returned a little over 60% over this timeframe.
In our interactive dashboard, Why American Airlines Stock Moved: AAL Stock Has Lost 56% Since 2018, we break down the factors behind this move.
(A) AAL’s Total Revenue has dropped 8.6% from $44.5 billion in FY 2018 to around $40.7 billion on an LTM basis
- AAL’s total revenue first rose from $44.5 billion in FY ’18 to $45.8 billion in FY ’19, before dropping sharply to as low as $17.3 billion in FY ’20 due to the pandemic affecting flight travel.
- However, the company’s sales have since recovered, rising steadily to almost $30 billion in FY ’21, and currently stand at $40.7 billion on an LTM basis.
- As of FY ’21, AAL’s largest segment is the Passenger segment, making up around 87% of the company’s net sales, with Cargo and Other sales bringing in the remaining 13%.
- For details about AAL revenues and comparison to peers, see American Airlines (AAL) Revenue Comparison
- Which Airlines Stock Will Offer Better Returns – American Or United?
- What To Expect From American Airlines’ Q2?
- Will American Airlines Stock Recover To Its Pre-Inflation-Shock Level?
- Pick Either American Airlines Stock Or Its Peer – Both May Offer Similar Returns
- American Airlines Stock Has Struggled To Outperform The S&P- Here’s Why
- American Airlines Set For Mixed Earnings Performance?
(B) Revenue per share (RPS) decreased 24% from $81.67 in 2018 to $62.44 currently
- AAL revenue dropped from $44.5 billion in 2018 to $40.7 billion currently, while the outstanding share count increased from 545.4 million in 2018 to 652.1 million currently.
- Due to this, RPS has declined from $81.67 in FY ’18 to $62.44 currently.
(C) Price-To-Sales (P/S) multiple for AAL rose from 0.5x in 2018 to 0.6x by 2020 end, but has pulled back to 0.2x currently, less than half its 2018 level
- Despite AAL’s weak performance in FY ’20, its P/S multiple rose from 0.5x in 2018 to 0.6x in 2020, on the back of rising investor expectations surrounding a revival in demand for the company’s services.
- However, due to the increased economic uncertainty weighing on the broader markets and rising crude prices expected to weigh on margins, the P/S multiple has pulled back, currently standing at around 0.2x.
- For additional details about the company stock returns and comparison to peers, see American Airlines (AAL) Stock Return Comparison.
|S&P 500 Return||6%||-16%||80%|
|Trefis Multi-Strategy Portfolio||9%||-16%||232%|
 Month-to-date and year-to-date as of 7/28/2022
 Cumulative total returns since the end of 2016