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United Continental's (UAL) Q4 Earnings: What's in the Cards?
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United Continental Holdings (UAL - Free Report) is scheduled to report its fourth-quarter earnings on Jan 23, after the market closes.
Last quarter, the company delivered a positive earnings surprise of 1.8%. However, the bottom line declined 28.6% on a year-over-year basis due to higher costs.
Operating revenues of $9,878 million were also marginally ahead of the Zacks Consensus Estimate of $9,857.3 million. Nevertheless, the top line shrunk 0.4% on a year-over-year basis. Multiple cancellations by the company due to the hurricanes negatively impacted the top line with passenger revenues declining 0.9% year over year.
However, things seem to be looking up for the company post hurricanes. This is evident from United Continental’s impressive price performance in the last three months. While the stock has gained 28.1%,the Zacks Airline industry rallied 12.1%.
Given this backdrop, let’s delve deeper to unearth the factors that are likely to influence the company’s fourth-quarter results:
We expect United Continental’s top line to be driven by higher passenger revenues owing to strong demand for air travel during the holiday season. In fact, the carrier performed exceedingly well in the Thanksgiving travel week (Nov 19 to Nov 26) smashing various records.
Buoyed by the improved scenario, the company issued an improved outlook with respect to consolidated passenger revenue per available seat miles (PRASM: a key measure of unit revenue) for the fourth quarter of 2017. United Continental now expects PRASM to be flat year over year (previous guidance had projected the metric in the band of down 2% to flat). Pre-tax margin (adjusted) is anticipated between 6% and 7% (previous guidance had projected the metric in the 3% to 5% range).
The Zacks Consensus Estimate for fourth-quarter PRASM (consolidated) is pegged at 12.23 cents, higher than 12.17 cents reported in the third quarter of 2017.
Apart from United Continental, key airline players like American Airlines Group (AAL - Free Report) and JetBlue Airways (JBLU - Free Report) have issued improved projections with respect to unit revenues for the fourth quarter of 2017.
However, we expect United Continental’s bottom-line growth to be restricted by increased costs (fuel and labor). Fuel price is forecasted to be $1.91 per gallon, higher than the Zacks Consensus Estimate of $1.80.
Cost per available seat miles, excluding fuel, profit-sharing, third-party business expenses and other special items, are estimated to increase between 1.5% and 2% in the to-be-reported quarter. The company anticipates capacity to increase 4% year over year.
What Does Our Model Say?
Our proven model too does not show conclusively that United Continental will beat earnings in fourth-quarter 2017. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. However, that is not the case as highlighted below.
Zacks ESP: United Continental has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.34 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: United Continental carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction inconclusive. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for fourth-quarter earnings reflects a 24.7% decrease on a year-over-year basis mainly due to higher fuel costs. The same for sales is projected at $9.43 billion, up 4.2% year over year.
United Continental Holdings, Inc. Price and EPS Surprise
Investors interested in the Zacks Airline industry may also consider Spirit Airlines (SAVE - Free Report) as our model shows it possesses the right combination of elements to post an earnings beat in its next release.
Spirit Airlines has an Earnings ESP of +3.30% and a Zacks Rank #3. The company will release fourth-quarter 2017 results on Feb 6.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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United Continental's (UAL) Q4 Earnings: What's in the Cards?
United Continental Holdings (UAL - Free Report) is scheduled to report its fourth-quarter earnings on Jan 23, after the market closes.
Last quarter, the company delivered a positive earnings surprise of 1.8%. However, the bottom line declined 28.6% on a year-over-year basis due to higher costs.
Operating revenues of $9,878 million were also marginally ahead of the Zacks Consensus Estimate of $9,857.3 million. Nevertheless, the top line shrunk 0.4% on a year-over-year basis. Multiple cancellations by the company due to the hurricanes negatively impacted the top line with passenger revenues declining 0.9% year over year.
However, things seem to be looking up for the company post hurricanes. This is evident from United Continental’s impressive price performance in the last three months. While the stock has gained 28.1%,the Zacks Airline industry rallied 12.1%.
Given this backdrop, let’s delve deeper to unearth the factors that are likely to influence the company’s fourth-quarter results:
We expect United Continental’s top line to be driven by higher passenger revenues owing to strong demand for air travel during the holiday season. In fact, the carrier performed exceedingly well in the Thanksgiving travel week (Nov 19 to Nov 26) smashing various records.
Buoyed by the improved scenario, the company issued an improved outlook with respect to consolidated passenger revenue per available seat miles (PRASM: a key measure of unit revenue) for the fourth quarter of 2017. United Continental now expects PRASM to be flat year over year (previous guidance had projected the metric in the band of down 2% to flat). Pre-tax margin (adjusted) is anticipated between 6% and 7% (previous guidance had projected the metric in the 3% to 5% range).
The Zacks Consensus Estimate for fourth-quarter PRASM (consolidated) is pegged at 12.23 cents, higher than 12.17 cents reported in the third quarter of 2017.
Apart from United Continental, key airline players like American Airlines Group (AAL - Free Report) and JetBlue Airways (JBLU - Free Report) have issued improved projections with respect to unit revenues for the fourth quarter of 2017.
However, we expect United Continental’s bottom-line growth to be restricted by increased costs (fuel and labor). Fuel price is forecasted to be $1.91 per gallon, higher than the Zacks Consensus Estimate of $1.80.
Cost per available seat miles, excluding fuel, profit-sharing, third-party business expenses and other special items, are estimated to increase between 1.5% and 2% in the to-be-reported quarter. The company anticipates capacity to increase 4% year over year.
What Does Our Model Say?
Our proven model too does not show conclusively that United Continental will beat earnings in fourth-quarter 2017. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. However, that is not the case as highlighted below.
Zacks ESP: United Continental has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.34 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: United Continental carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction inconclusive. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for fourth-quarter earnings reflects a 24.7% decrease on a year-over-year basis mainly due to higher fuel costs. The same for sales is projected at $9.43 billion, up 4.2% year over year.
United Continental Holdings, Inc. Price and EPS Surprise
United Continental Holdings, Inc. Price and EPS Surprise | United Continental Holdings, Inc. Quote
Another Stock That Warrants a Look
Investors interested in the Zacks Airline industry may also consider Spirit Airlines (SAVE - Free Report) as our model shows it possesses the right combination of elements to post an earnings beat in its next release.
Spirit Airlines has an Earnings ESP of +3.30% and a Zacks Rank #3. The company will release fourth-quarter 2017 results on Feb 6.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>