Stock Market Wrap & Airline Earnings on Tap

This article offers a video and brief written wrap up of the day's activity, and a summary glance at some important earnings reports on schedule for Tuesday morning.

(This article should interest readers of NYSE: AAI, NYSE: BAC, Nasdaq: JBLU, Nasdaq: UAUA, AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, AMEX: DOG, AMEX: SDS, AMEX: QLD)



The opinions expressed within the video may not agree with the views of Wall Street Greek.

Stock Market Wrap

What happens to a bird that swallows a mosquito infested with the larva of parasites? Probably the same thing that happened to Bank of America (NYSE: BAC) I suppose. Saving Countrywide Financial may yet kill BAC. We're exaggerating, but the pain to own this leader in the facilitation of home ownership is proving hard to bear at the moment. Maybe we'll all laugh about this when the housing market is back to its normal growth patterns and Bank of America is sitting pretty, but it's sure hard to envision that at this point isn't it...

That the market once again held up despite the worse than expected report from BAC, was like Rocky Balboa calling on Apollo Creed to keep it coming. They say life is not about how hard you can hit, but how much you can take and keep moving forward. If that's true, than yours truly is one tough mother.

Earnings on Tap

Of the slew of earnings reports scheduled for Tuesday, we tried to pull out a handful of the most interesting ones due for morning reporting.

Considering that airlines keep turning belly up, or merged with their neighbor, you should be interested in the reports of a few airlines on Tuesday. The funny thing about the situation in the airline industry is that you can't make heads nor tails of how to play the group. Unless you are the shrewdest of analysts, and have close and friendly relationships with management, you could be handed your head. A company you peg for bankruptcy could prove a synergistic addition to some other industry participant's plans, or vice versa.

AirTran Holdings (NYSE: AAI) moved its conference call back a day, perhaps due to a flight delay? AAI investors better hope it's not due to a flight cancellation. I can just see the CEO telling the Investor Relations Chief, change the word "disaster" to "difficulty" and "recession" to "contraction." That's the new English folks!

The analyst community of four (with estimates) has grown increasingly sour on this one, as the consensus estimate has deteriorated by twenty-two cents over the course of the last ninety days, and now stands at a loss of $0.31 for the March quarter. The rest of the year has not moved counter to trend, and the full year '08 figure is now deep in the red also, at a per share loss of $0.44, according to Thomson Financial. Yikes!

AAI's price-to-book is about 1-to-1, but what matters more than any value indication is which way book value is headed and at what rate. Who cares what the P/B is when book value is disappearing. Debt stands at over two times equity, and EBITDA-to-interest is at 2.8X based on '07, and guess what, debt is growing (so it should not improve). I do not know this company intimately, but a quick look at the numbers says "watch out" to me. Just a thought... Of the few brave souls who cover the company, probably because they have to, most look asleep with a hold rating, while a couple are real rodeo stars with buy ratings. There's a big short interest and the stock chart says head for the hills. Some would say the short interest offers reason for optimism, but I would not be playing roulette with this one.

Also on the earnings slate for Tuesday are JetBlue (Nasdaq: JBLU) and UAL Corp. (Nasdaq: UAUA). That's all for now folks... I'm tired.

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