We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
United Continental (UAL) Q2 Earnings: What's in the Cards?
Read MoreHide Full Article
United Continental Holdings, Inc. (UAL - Free Report) ) will be reporting second-quarter earnings on Jul 20, before the market opens. Last quarter, the company recorded a positive earnings surprise of 5.13%. Let’s see how things are shaping up for this announcement.
Factors at Play This Quarter
United Airlines, the Chicago-based unit of the company, has gone through a turbulent few months owing to labor issues, macroeconomic woes and staggering demand. Also, the company’s challenges seem to be increasing. It will be paying fine related to an issue with a Newark flight. The company will however not be charged for it. The company had reached a tentative agreement on a labor contract for which voting is currently underway. Scheduled to close on Aug 12, a negative result could put operational efficiency in disarray.
In addition to internal issues, the global rise in terrorism has been a key reason behind plunging airline stock prices. Recent incidents of terrorism, such as the Bastille Day attack in Nice, France as well as the café attack in Dhaka have had an extremely unfavorable impact on the company’s business. Other companies like Airlines Group Inc. (AAL - Free Report) and Delta Air Lines Inc. (DAL - Free Report) too had to bear the brunt of these issues. Also, the effect of Brexit on the upcoming earnings remains to be seen.
However, positives like low fuel prices, focus on business travelers with new initiatives like United Polaris and some headway in negotiations on employee contracts should boost the company’s results and lead to margin expansion. Also, the company finally saw some improvement in June with growth in traffic.
Improved Guidance by the Company
The company recently raised its guidance for the second quarter. United Airlines expects consolidated PRASM in the second quarter to decline 6.50–6.75% (compared with previous band of 6.50–7.5%). Pre-tax margin is expected in the band of 14% to 14.5%. Fuel Price (inclusive of all cash settled hedges) is projected at $1.44 per gallon (old guidance: $1.45 to $1.50).
Our proven model does not conclusively show that United Continental is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Most Accurate estimate stands at $2.54, while the Zacks Consensus Estimate is pegged at $2.53. Hence, the ESP is +0.40%.
Zacks Rank: The company carries a Zacks Rank #5 (Strong Sell).
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here is a stock you may want to consider as our model shows it has the right combination of elements to post an earnings beat this quarter.
Latam Airlines Group S.A. has an Earnings ESP of over 100% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
United Continental (UAL) Q2 Earnings: What's in the Cards?
United Continental Holdings, Inc. (UAL - Free Report) ) will be reporting second-quarter earnings on Jul 20, before the market opens. Last quarter, the company recorded a positive earnings surprise of 5.13%. Let’s see how things are shaping up for this announcement.
Factors at Play This Quarter
United Airlines, the Chicago-based unit of the company, has gone through a turbulent few months owing to labor issues, macroeconomic woes and staggering demand. Also, the company’s challenges seem to be increasing. It will be paying fine related to an issue with a Newark flight. The company will however not be charged for it. The company had reached a tentative agreement on a labor contract for which voting is currently underway. Scheduled to close on Aug 12, a negative result could put operational efficiency in disarray.
In addition to internal issues, the global rise in terrorism has been a key reason behind plunging airline stock prices. Recent incidents of terrorism, such as the Bastille Day attack in Nice, France as well as the café attack in Dhaka have had an extremely unfavorable impact on the company’s business. Other companies like Airlines Group Inc. (AAL - Free Report) and Delta Air Lines Inc. (DAL - Free Report) too had to bear the brunt of these issues. Also, the effect of Brexit on the upcoming earnings remains to be seen.
However, positives like low fuel prices, focus on business travelers with new initiatives like United Polaris and some headway in negotiations on employee contracts should boost the company’s results and lead to margin expansion. Also, the company finally saw some improvement in June with growth in traffic.
Improved Guidance by the Company
The company recently raised its guidance for the second quarter. United Airlines expects consolidated PRASM in the second quarter to decline 6.50–6.75% (compared with previous band of 6.50–7.5%). Pre-tax margin is expected in the band of 14% to 14.5%. Fuel Price (inclusive of all cash settled hedges) is projected at $1.44 per gallon (old guidance: $1.45 to $1.50).
UNITED CONT HLD Price and EPS Surprise
UNITED CONT HLD Price and EPS Surprise | UNITED CONT HLD Quote
Earnings Whispers
Our proven model does not conclusively show that United Continental is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Most Accurate estimate stands at $2.54, while the Zacks Consensus Estimate is pegged at $2.53. Hence, the ESP is +0.40%.
Zacks Rank: The company carries a Zacks Rank #5 (Strong Sell).
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here is a stock you may want to consider as our model shows it has the right combination of elements to post an earnings beat this quarter.
Latam Airlines Group S.A. has an Earnings ESP of over 100% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>