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United (UAL) Up 12.8% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for United Airlines (UAL). Shares have added about 12.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is United due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Narrower-Than-Expected loss in Q1

United Airlines  reported first-quarter 2024 loss per share (excluding 23 cents from non-recurring items) of 15 cents, which was narrower than the Zacks Consensus Estimate loss of 53 cents. In the year-ago reported quarter, UAL reported a loss of 63 cents per share.

Operating revenues of $12,539 million beat the Zacks Consensus Estimate of $12,428.4 million. The top line increased 9.7% year over year due to upbeat air-travel demand. This was driven by a 10.1% rise in passenger revenues (which accounted for 90.2% of the top line) to $11,313 million. Almost 39,325 passengers traveled on UAL flights in the first quarter, up 6.8% year over year.

Cargo revenues fell 1.8% year over year to $391 million. Revenues from other sources jumped 10.3% from the first quarter of 2023 to $835 million.

Other Details of Q1

Below, we present all comparisons (in % terms) with the first quarter of 2023 figures unless otherwise stated.

Consolidated passenger revenue per available seat mile (a key measure of unit revenues) inched up 1%. Total revenue per available seat mile grew 0.6% to 17.50 cents. The average yield per revenue passenger mile rose 0.7% to 19.70 cents.

Airline traffic, measured in revenue passenger miles, grew 9.3%. Capacity, measured in available seat miles, expanded 9.1%. Consolidated load factor (percentage of seat occupancy) expanded 0.2 percentage points to 80.1%.

Average aircraft fuel price per gallon fell 13.5% to $2.88. Fuel gallons consumed were up 7.7%.

Operating expenses (on a reported basis) increased 8.4% to $12,440 million. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, increased 4.7% to 13.13 cents.

UAL exited the first quarter with cash and cash equivalents of $8.4 billion compared with $6.06 billion at the fourth-quarter end. Long-term debt was $23.059 billion compared with $25.057 billion at the prior-quarter end.

Outlook

For second-quarter 2024, adjusted earnings per share is expected to be between $3.75 and $4.25.

For 2024, adjusted earnings per share is anticipated to be between $9 and $11. Adjusted capital expenditures are expected to be around $6.5 billion.

Due to aircraft delivery delays, UAL now anticipates 61 narrowbody aircraft and five widebody aircraft deliveries in 2024. Additionally, the company anticipates almost 100 narrowbody aircraft deliveries (on average) from 2025 through 2027 per year.

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How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 7.6% due to these changes.

VGM Scores

At this time, United has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, United has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

United belongs to the Zacks Transportation - Airline industry. Another stock from the same industry, Delta Air Lines (DAL), has gained 11.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Delta reported revenues of $13.75 billion in the last reported quarter, representing a year-over-year change of +7.8%. EPS of $0.45 for the same period compares with $0.25 a year ago.

For the current quarter, Delta is expected to post earnings of $2.40 per share, indicating a change of -10.5% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.9% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Delta. Also, the stock has a VGM Score of A.

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