American Airlines Group Inc.
American Airlines Group Inc. (NASDAQ: AAL) is the world's largest airline by scheduled revenue passenger miles. Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C. are the firm's critical hubs.
Key Highlights:
- According to the earnings guidance, AAL expects overall revenue to drop 20% to 22% in the first quarter of 2022 compared to the same period in 2019.
- The company is incurring losses due to higher operating costs. In Q4FY21, net loss was USD 931 million against a loss of USD 2,178 million in Q4FY20.
- Due to the comeback of covid variations, the Ukraine and Russia crises, and record-high inflation in the US may harm the airlines business.
- On February 7, 2022, GOL Linhas Aéreas Inteligentes S.A., Brazil's largest domestic airline, stated that it had reached definitive agreements with AAL to develop its commercial collaboration through an investment partnership.
- Stock is currently trading below its crucial long-term as well as short-term 50-day and 200-day DMA support levels.
- Stock is currently leaning towards the lower-band of the 52-week range of USD 14.91 to USD 26.09.
Stock Recommendation
Based on the decline in fundamentals, bleak outlook, continuing losses, higher operating costs, and unfavorable technical indicators, we recommend a "Watch" rating on the stock at the closing price of USD 17.43, down 2.46% as of February 22, 2022.
3-Year Technical Price Chart (as of February 22, 2022). Source: REFINITIV, Analysis by Kalkine Group
*The reference data in this report has been partly sourced from REFINITIV.
Gerdau S.A.
Gerdau S.A. (NYSE: GGB) is a steel and steel-related company. It operates in civil construction, agricultural, automotive, iron ore, exports, research and development, and home steel goods. It sells nails, rebar, columns, billets, slabs, tribar tutor, mechanical construction bars, and reinforced steel locks, among other things.
Key Highlights:
- According to the steelmaker organization Instituto Aço Brasil on January 20, 2022, Brazilian steel consumption declined 17.27% in December 2021 compared to the same month in 2020. The decrease was caused by reduced domestic shipments in December, resulting in negative momentum.
- Due to a rise in crude steel production, the company's net sales in Q3FY21 were BRL 21,317 million, up from BRL 12,222 million in Q3FY20.
- The company's net income in Q3FY21 was BRL 5,594 million, compared to BRL 795 million in Q3FY20.
- The stock is currently trading below its crucial support level 50 days and 200 days DMA from a technical viewpoint. Its RSI of ~41.34 indicates a bearish trend.
- Stock is currently leaning towards the lower-band of the 52-week range of USD 4.19 to USD 7.27
Stock Recommendation
Based on the company's recent financial numbers, macro headwinds, and unfavorable technical indicators, we recommend a "Watch" rating on the stock at the closing price of USD 5.02, up 0.80% as of February 22, 2022.
3-Year Technical Price Chart (as of February 22, 2022). Source: REFINITIV, Analysis by Kalkine Group
*The reference data in this report has been partly sourced from REFINITIV.
Arcos Dorados Holdings Inc.
Arcos Dorados Holdings Inc. (NYSE: ARCO) runs McDonald's-branded restaurants in about 20 Latin American and Caribbean countries and territories. It is powered by two types of restaurants: company-operated restaurants and franchised restaurants.
Key Highlights:
- Because the company's relationship with McDonald's is so meaningful, any changes to its connection with McDonald's could harm its business, operating results, and financial position.
- In 2022, the firm plans to open at least 55 new restaurants, with 200 or more planned between 2022 and 2024.
- Total capital expenditures for FY22 are expected to be between USD 180 and 200 million, entirely funded by cash on hand and cash produced from operations. From 2022 to 2024, the overall capital expenditures budget is estimated to be around USD 650 million.
- Stock is currently trading far above its crucial long-term as well as short-term 50-day and 200-day DMA support levels, and its RSI is at 71.22, indicating an overbought zone.
- Stock is currently leaning towards the higher-band of the 52-week range of USD 4.33 to USD 7.36. Thus, it may face retracement from the overstretched levels.
Stock Recommendation
Based on the company's operational risks, underutilized capital expenditure, and unfavourable technical indicators, we recommend a "Watch" rating on the stock at the closing price of USD 7.17, up 0.56% as of February 22, 2022.
3-Year Technical Price Chart (as of February 22, 2022). Source: REFINITIV, Analysis by Kalkine Group
*The reference data in this report has been partly sourced from REFINITIV.
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