Arbitrage opportunity on American Airlines Group?


Wolfe Research has an interesting observation on American Airlines Group (AAL +1.1%) that could give investors a reason to buy the stock.

Analysts with the boutique investment note that the 2015 consensus EPS estimates on American, which feel "light" to them for starters, have risen faster this year than the carrier's stock price, 63% vs. 56%.

The differential is the biggest that Wolfe found in the sector.

From other sites
Comments (7)
  • Philip Marlowe
    , contributor
    Comments (1571) | Send Message
     
    That is not arbitrage.
    22 Aug 2014, 02:56 PM Reply Like
  • salvatort
    , contributor
    Comments (411) | Send Message
     
    Given that EPS estimates are ESTIMATES, either Wolfe Research or the person who reported this news has no idea what arbitrage is...
    22 Aug 2014, 03:01 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (10596) | Send Message
     
    That is the loosest use of the word "arbitrage" since Richard Gere: http://bit.ly/1oi4cnm
    22 Aug 2014, 03:07 PM Reply Like
  • markcc
    , contributor
    Comments (2891) | Send Message
     
    Arbitrage = the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset.

     

    As for the difference between 63% and 56%, AAL is just out of bankruptcy, all numbers are not stable. Therefore all forecasts are unreliable since the combined company has not gone through complete consolidation or one full year of results. This little difference is not material given all the other factors affecting the stock.
    22 Aug 2014, 03:16 PM Reply Like
  • Jake Roese
    , contributor
    Comments (23) | Send Message
     
    Haha when this little piece of breaking news popped up I thought I was losing it. Glad I'm not the only one who didn't grasp the "arbitrage opportunity."
    22 Aug 2014, 03:25 PM Reply Like
  • The Legend
    , contributor
    Comments (4) | Send Message
     
    They should have noted that the earnings per share are rising faster than the price of these shares. Leave arbitrage out of the equation.
    23 Aug 2014, 01:19 PM Reply Like
  • starcorral
    , contributor
    Comments (1632) | Send Message
     
    uhhh whut?
    23 Aug 2014, 02:35 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs