We assign a fundamental rating of 3 out of 10 to AAL. AAL was compared to 22 industry peers in the Passenger Airlines industry. While AAL is still in line with the averages on profitability rating, there are concerns on its financial health. AAL has a decent growth rate and is not valued too expensively.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year AAL was profitable.
In the past year AAL had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: AAL reported negative net income in multiple years.
AAL had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

With a decent Return On Assets value of 0.97%, AAL is doing good in the industry, outperforming 63.64% of the companies in the same industry.
AAL's Return On Invested Capital of 4.48% is fine compared to the rest of the industry. AAL outperforms 63.64% of its industry peers.
AAL had an Average Return On Invested Capital over the past 3 years of 5.54%. This is significantly below the industry average of 20.60%.

		Industry Rank	Sector Rank
ROA	0.97%
ROE	N/A
ROIC	4.48%

ROA(3y)0.96%

ROA(5y)-2.89%

ROE(3y)N/A

ROE(5y)N/A

ROIC(3y)5.54%

ROIC(5y)N/A

1.3 Margins

The Profit Margin of AAL (1.11%) is better than 63.64% of its industry peers.
AAL's Profit Margin has declined in the last couple of years.
AAL has a Operating Margin (4.22%) which is comparable to the rest of the industry.
AAL's Operating Margin has declined in the last couple of years.
AAL has a Gross Margin of 65.01%. This is in the better half of the industry: AAL outperforms 77.27% of its industry peers.
AAL's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	4.22%
PM (TTM)	1.11%
GM	65.01%

OM growth 3YN/A

OM growth 5Y-5.79%

PM growth 3YN/A

PM growth 5Y-15.78%

GM growth 3Y3.63%

GM growth 5Y0.67%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), AAL is destroying value.
The number of shares outstanding for AAL has been increased compared to 1 year ago.
Compared to 5 years ago, AAL has more shares outstanding
AAL has a better debt/assets ratio than last year.

2.2 Solvency

AAL has an Altman-Z score of 0.71. This is a bad value and indicates that AAL is not financially healthy and even has some risk of bankruptcy.
With a Altman-Z score value of 0.71, AAL perfoms like the industry average, outperforming 54.55% of the companies in the same industry.
The Debt to FCF ratio of AAL is 32.56, which is on the high side as it means it would take AAL, 32.56 years of fcf income to pay off all of its debts.
AAL has a Debt to FCF ratio of 32.56. This is in the better half of the industry: AAL outperforms 63.64% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	N/A
Debt/FCF	32.56
Altman-Z	0.71

ROIC/WACC0.62

WACC7.19%

2.3 Liquidity

A Current Ratio of 0.54 indicates that AAL may have some problems paying its short term obligations.
AAL has a Current ratio (0.54) which is in line with its industry peers.
A Quick Ratio of 0.42 indicates that AAL may have some problems paying its short term obligations.
AAL has a Quick ratio (0.42) which is comparable to the rest of the industry.

		Industry Rank	Sector Rank
Current Ratio	0.54
Quick Ratio	0.42

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The earnings per share for AAL have decreased strongly by -21.64% in the last year.
The earnings per share for AAL have been decreasing by -17.21% on average. This is quite bad
AAL shows a small growth in Revenue. In the last year, the Revenue has grown by 1.27%.
The Revenue has been growing slightly by 3.44% on average over the past years.

EPS 1Y (TTM)-21.64%

EPS 3YN/A

EPS 5Y-17.21%

EPS Q2Q%-156.67%

Revenue 1Y (TTM)1.27%

Revenue growth 3Y21.96%

Revenue growth 5Y3.44%

Sales Q2Q%0.32%

3.2 Future

Based on estimates for the next years, AAL will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.67% on average per year.
AAL is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.83% yearly.

EPS Next Y-67.3%

EPS Next 2Y-1.62%

EPS Next 3Y10.45%

EPS Next 5Y14.67%

Revenue Next Year1.45%

Revenue Next 2Y4.25%

Revenue Next 3Y4.52%

Revenue Next 5Y3.83%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

AAL is valuated correctly with a Price/Earnings ratio of 14.30.
77.27% of the companies in the same industry are more expensive than AAL, based on the Price/Earnings ratio.
AAL is valuated rather cheaply when we compare the Price/Earnings ratio to 27.32, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 8.12, the valuation of AAL can be described as reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AAL indicates a rather cheap valuation: AAL is cheaper than 95.45% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 24.32. AAL is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	14.3
Fwd PE	8.12

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, AAL is valued a bit cheaper than the industry average as 77.27% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, AAL is valued cheaper than 90.91% of the companies in the same industry.