American Airlines Group Inc. (NASDAQ: AAL) The stock price lost about 56% from $32 in 2018 to $14 today, mainly due to unfavorable changes in the P/S multiple. In addition, the company saw its sales decline during this period and, coupled with an increase in the number of outstanding shares, its earnings per share also declined. As a result, the stock underperformed the S&P, which returned just over 60% during this period.
In our interactive dashboard, Why American Airlines Shares Moved: AAL shares have lost 56% since 2018we break down the factors behind this movement.
AAL’s total revenue is down 8.6% from $44.5 billion in FY 2018 to approximately $40.7 billion on an LTM basis
- AAL’s total revenues first rose from $44.5 billion in FY ’18 to $45.8 billion in FY ’19 before falling sharply to just $17.3 billion in FY ’20 due to the pandemic affects air travel.
- However, the company’s revenue has since recovered, steadily rising to nearly $30 billion in FY ’21, and currently stands at $40.7 billion on an LTM basis.
- As of FY ’21, AAL’s largest segment is the passenger segment, accounting for approximately 87% of the company’s net sales, with sales of freight and other accounting for the remaining 13%.
- For more information on AAL earnings and peer comparison, see: American Airlines Earnings Comparison
Revenue per share fell 24% from $81.67 in 2018 to $62.44 currently
- AAL’s revenue declined from $44.5 billion in 2018 to $40.7 billion currently, while the number of shares outstanding increased from 545.4 million in 2018 to 652.1 million currently.
- As a result, the RPS has fallen from $81.67 in FY ’18 to $62.44 right now.
Price-to-Sales (P/S) multiple for AAL rose from 0.5x in 2018 to 0.6x by the end of 2020, but has now declined to 0.2x, less than half the 2018 level
- Despite AAL’s weak performance in FY ’20, the P/S multiple increased from 0.5x in 2018 to 0.6x in 2020, reflecting rising investor expectations of a rebound in demand for the company’s services .
- With heightened economic uncertainty weighing on broader markets and rising crude oil prices expected to weigh on margins, the P/S multiple has receded and is currently around 0.2x.
- For more information on the company’s stock returns and comparison with peers, see: American Airlines Stock Return Comparison.
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