American Airlines Stock Has Struggled To Outperform The S&P- Here’s Why

AAL: American Airlines logo
American Airlines

American Airlines Group Inc (NASDAQ: AAL) stock price lost almost 60% from $32 in 2018 end to around $13 currently, primarily due to unfavorable changes in its P/S multiple. During this period, the company’s sales have risen just around 2%, and there was a strong 32% rise in the outstanding share count. Additionally, over the same period, the S&P 500 returned around 55%, meaning that American Airlines stock has strongly underperformed the index since 2018-end.

In our interactive dashboard, Why American Airlines Stock Moved: AAL Stock Has Lost 59% Since 2018, we break down the factors behind this move.

(A) AAL’s Total Revenue has risen marginally from $44.5 billion in FY 2018 to $45.2 billion on an LTM basis

  • AAL’s total revenue initially rose from $44.5 billion in FY 2018 to $45.8 billion in FY 2019, but dropped sharply to $17.3 billion in FY 2020.
  • Revenues have strongly recovered since, jumping to $29.9 billion in FY ’21, and now stand much higher at $45.2 billion on an LTM basis, slightly higher than its FY ’18 level.
  • One of the major airlines of the United States, around 87% of American Airlines’ sales came from the Passenger segment as of FY ’21, standing at around $26.1 billion.
  • Cargo and Other sales brought in the remaining 13% of sales in FY ’21.
  • For additional details about AAL’s revenues and comparison to peers, see American Airlines Group (AAL) Revenue Comparison
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(B) Revenue per share (RPS) decreased 23% from $90.07 in FY 2018 to $69.27 currently

  • AAL’s revenue rose from $44.5 billion in FY 2018 to $45.2 billion currently, while the outstanding share count rose from 494.5 million in 2018 to 652.7 million currently.
  • Due to this, RPS has dropped from $90.07 in FY ’18 to $69.27 currently.

(C) Price-To-Sales (P/S) multiple for AAL hovered around 0.4x between 2018 and 2021 end, but has dropped sharply to 0.2x currently

  • AAL’s P/S multiple stood at around 0.4x by late 2021, but due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, 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.

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 Returns Dec 2022
MTD [1]
YTD [1]
Total [2]
 AAL Return -9% -27% -72%
 S&P 500 Return -5% -18% 74%
 Trefis Multi-Strategy Portfolio -5% -22% 215%

[1] Month-to-date and year-to-date as of 12/21/2022
[2] Cumulative total returns since the end of 2016

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