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Should you buy American Airlines stock after its dull Q1 guidance?

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Shares of American Airlines Group Inc (NASDAQ: AAL) ended nearly 10% down on Wednesday after the air carrier issued bit of a dull outlook for its fiscal first quarter.

American Airlines’ updated Q1 outlook

On an adjusted basis, the airline now expects its per-share earnings to fall between 1 cent and 5 cents. In comparison, analysts were at 6 cents a share.

American Airlines attributed the weakness in its guidance to higher labour and fuel costs. Interestingly, though, it expects jet fuel to be in the range of $3.27 to $3.32 per gallon now versus $3.33 to $3.38 it had guided earlier for Q1.

On the plus side, the airline expects total revenue per available seat mile to be up roughly 25.5% this quarter. For the year, American Airlines stock is down nearly 25% at writing.  

Is American Airlines stock worth buying?

Despite underperformance, Chris Grisanti of Mai Capital Management still recommends that investors pull out of this airline stock, especially after the dull guidance today. On CNBC’s “Power Lunch”, he said:

Things don’t get better than they are now. Planes are full, fares are sky high. So, if you can’t make money here – American Airlines just said they’ll make about 5 cents a share this quarter – it’s only going to get worse from here.

Peer Delta Air Lines is scheduled to report its quarterly results on Thursday. Grisanti expects its report to come in better than expected and reflect positively on shares of the entire group, including American Airlines.

He recommends selling AAL on that tick up.

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