1-Star Stocks Poised to Plunge: US Airways?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, airline operator US Airways (NYS: LCC) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at US Airways' business and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||Tempe, Ariz. (1981)|
|Market Cap||$867.1 million|
|Trailing-12-Month Revenue||$12.55 billion|
|Management||Chairman/CEO William Parker (since 2005)|
CFO Derek Kerr (since 2005)
|Return on Assets (Average, Past 3 Years)||0.1%|
|Cash/Debt||$2.25 billion / $4.34 billion|
Delta Air Lines (NYS: DAL)
Southwest Airlines (NYS: LUV)
United Continental (NYS: UAL)
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 42% of the 768 members who have rated US Airways believe the stock will underperform the S&P 500 going forward. These bears include All-Star Gordogato, who is ranked in the top 15% of our community, and south777seas.
Earlier this year, Gordogato offered a rather bleak outlook on the stock: "Poor customer service will doom US Airways. Look for companies like Southwest to eat the lunches of the more traditional US air carriers."
Currently, US Airways even sports a particularly alarming debt-to-equity of more than 7,000%. That's much higher than even the lofty levels that rivals like Delta (1,876%) and United Continental (700%) have, let alone Southwest (59%).
CAPS member south77seas elaborates on the US Airways bear case:
High fuel costs are here to stay. Fierce competition. Continuing TSA horror show is shown on the nightly news. Airline security costs are high and going higher. Generally poor customer service. Prolonged weak economy and high unemployment means airfares to remain flat. High debt load. Fitch Ratings says LCC notes carry 'exceptionally high levels of credit risk' and 'default is imminent or inevitable'. They have already seen two roundtrips to the bankruptcy court in the last 9 years. Small, inconsistent profits are just 'lipstick on a pig'.
What do you think about US Airways, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Southwest. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.