Over the past month, American Airlines’ stock has declined by 4.21%, underperforming the Transportation sector’s 1.49% increase and the S&P 500’s 0.6% rise. The airline’s next earnings report is anticipated on January 27, 2026, with an expected earnings per share (EPS) of $0.38, a 55.81% decrease from the previous year. Revenue is projected at $14.07 billion, a 3.02% rise from the prior year.
Zacks Consensus Estimates
The Zacks Consensus Estimates for the fiscal year foresee EPS of $0.56 and revenue of $54.7 billion, showing changes of -71.43% and 0% from the previous year. Analyst estimate revisions often align with short-term business trends. The Zacks Rank model ranks stocks based on these changes, with a #1 rank showing an average return of 25% since 1988.
Currently, American Airlines holds a Zacks Rank of #3 (Hold) and a Forward P/E ratio of 7.46, lower than the industry’s average. The Transportation – Airline industry has a Zacks Industry Rank of 155, placing it in the bottom 37% of over 250 industries.
The stock is clearly struggling, having fallen over 4% in the last month while the market gained. We see a disconnect, as its valuation appears cheap with a Forward P/E of 7.46, well below the industry average. This sets up a critical moment for the earnings report tomorrow, January 27th.
Expectations are for earnings per share to plummet by over 55% compared to this time last year, which is a major concern. Much of this reflects the higher labor costs from the new pilot contracts that we saw finalized across the industry in mid-2025. This pressure on profits is likely already priced into the stock’s recent weakness.
Trading Strategies
On the other hand, revenue is projected to grow slightly, suggesting demand remains solid. Recent TSA data showed that passenger traffic over the 2025 holiday season was up nearly 5% from pre-pandemic levels, confirming people are still flying. The main question for traders is whether this strong demand can offset rising costs and a recent dip in jet fuel prices.
Given these conflicting signals, we believe the clearest opportunity is to trade the expected volatility around the announcement. Options pricing suggests a significant move is anticipated, so a strategy like a straddle could profit whether the stock jumps or drops sharply. The key is that the stock must move more than the premium paid for the options.
For those with a directional view, buying puts seems to follow the current downward trend and weak industry rank. However, with expectations so low, any positive surprise in earnings or future guidance could cause a sharp rally, making call options attractive for a contrarian bet. We saw a similar rally after a pessimistic Q3 2025 report, where beating low expectations mattered most.
