United Airlines (UAL) reported third-quarter earnings Tuesday that came in just above analyst expectations. The stock is up nearly 12% Wednesday on the heels of this update. Here’s how the company performed relative to the consensus estimate:
- Earnings per share: $3.33 adjusted compared to the $3.17 consensus
- Revenue: $14.84 billion compared to the $14.78 billion consensus
Revenue represented a 2.5% improvement year over year, but net income was down 15% from this time last year to just $965 million.
The profitability problem can be traced back to increases in costs – primarily wages. However, the company managed to offset higher costs by trimming flights with lower fares.
United Airlines also made an effort to raise its capacity by more than 4% for Q3, which helped grow revenue. Corporate revenue in particular provided a 13% lift, while premium revenue (most notably associated with business class tickets) climbed 5%. Economy tickets grew 20%.
One of the biggest takeaways from the earnings update was the announcement of a $1.5 billion share buyback program. The airliner hasn’t taken part in share repurchasing since before the COVID-19 pandemic.
CEO Scott Kirby says that the company is currently committed to investing in its people and the business. This will remain a priority over the share repurchase program, and he advised that the efforts to buy back shares will be tactical and measured.
Looking ahead to the fourth quarter United is expecting an adjusted earnings per share somewhere in the range of $2.50 to $3.00 per share. The company posted just $2 per share in Q4 last year. Analysts are expecting $2.68 according to the LSEG estimate.
UAL has officially taken flight, as the stock is now up 19% in the past week and more than 61% in the past 3 months. It’s up a whopping 74% through 2024 thus far, but can it really maintain this pace?
We’ve taken a look at UAL in the VectorVest stock software and found 3 things you need to know if you’re a current investor or looking for an opportunity to trade this stock.
UAL Has Good Upside Potential With Fair Safety and Excellent Timing
VectorVest simplifies your trading strategy by giving you all the clear, actionable insights you need to make calculated, emotionless investment decisions in 3 ratings. This saves you time and stress while empowering you to win more trades.
The ratings are relative value (RV), relative safety (RS), and relative timing (RT). Each sits on a scale of 0.00-2.00 with 1.00 being the average, allowing for quick and easy interpretation.
You’re even given a buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating, so there are no guessing games. Here’s what we found for UAL:
- Good Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. It’s a far superior indicator than the typical comparison of price to value alone. The RV rating of 1.14 is good for UAL. The stock is slightly undervalued with a current value of $76.57/share.
- Fair Safety: The RS rating is a risk indicator. It’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. UAL has a fair RS rating of 0.92, albeit below the average.
- Excellent Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year. UAL has an excellent RT rating of 1.96, reflecting the torrent pace it has been on through this year so far.
The overall VST rating of 1.46 is excellent for UAL and enough to earn the stock a BUY recommendation in the VectorVest system.
Take a closer look at this opportunity with a free stock analysis and set yourself for a smooth, profitable trade without the stress and uncertainty. Transform your approach to analysis for the better today at VectorVest!
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VectorVest advocates buying safe, undervalued stocks, rising in price. UAL delivered an impressive Q3 performance despite challenges with rising costs and lower fares. The company is initiating its first share repurchasing program in nearly 5 years, and the stock has gained 11% today so far. It has good upside potential, fair safety, and excellent timing.
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