Core Viewpoint - American Airlines (AAL) stock experienced a decline of up to 10% despite exceeding Q2 earnings expectations, as the company provided a cautious outlook and narrowed its full-year EPS guidance amid ongoing travel demand uncertainty [1][7]. Financial Performance - In Q2, American Airlines reported sales of $14.39 billion, slightly up from $14.33 billion year-over-year and above estimates of $14.28 billion [3]. - The company's Q2 earnings per share (EPS) were $0.95, surpassing expectations of $0.79 by 20%, although this was a decrease from $1.09 EPS a year ago [3]. - The company reinstated but lowered its full-year EPS guidance to a range of a loss of $0.20 to a profit of $0.80, with a midpoint of $0.30, significantly lower than the previous forecast of $1.70 to $2.70 per share [7]. Market Dynamics - American Airlines benefited from strong international and premium cabin demand, particularly in the Atlantic markets, where passenger unit revenue increased by 5% year-over-year [4]. - The airline's loyalty program saw a 7% increase in Active AAdvantage accounts and a 6% rise in spending on co-branded credit cards, contributing to margin growth [5]. Valuation Metrics - Currently, American Airlines stock trades at 17.4 times forward earnings, which is a discount compared to the S&P 500's 24.5 times but higher than the Zacks Transportation-Airline Industry average of 14.5 times [9]. - The price-to-sales ratio for American Airlines is notably low at $0.15 for every dollar earned, compared to Delta and United Airlines, which are at $0.50 or more [10]. Outlook - The company anticipates an adjusted loss of $0.10 to $0.60 per share in Q3, citing weak domestic demand in July [8]. - Despite being the largest airline globally in terms of passengers and daily flights, the cautious outlook regarding EPS guidance suggests that better buying opportunities may arise in the future [12][14].