United Continental Holdings (UAL - Free Report) reported better-than-expected earnings and revenues in the fourth quarter of 2018. The company’s earnings (excluding 71 cents from non-recurring items) of $2.41 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line showed a massive year-over-year improvement.
Operating revenues came in at $10.49 billion, outpacing the Zacks Consensus Estimate of $10.37 billion. Additionally, the top line rose significantly year over year.
The strong earnings and revenue beat pleased investors. Consequently, the stock climbed more than 6% in after-hours trading on Jan 15.
Passenger revenues, accounting for bulk (91.1%) of the top line, increased 11.3%, highlighting strong demand for air travel. Cargo revenues ascended 3.1%, accounting for 3.2% of the top line. Revenues from other sources accounted for the balance.
Operating Results
Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) augmented 5% year over year to 13.87 cents. Total revenue per available seat mile increased 4.8% year over year to 15.23 cents. On a consolidated basis, average yield per revenue passenger mile inched up 3.8% from the year-ago quarter.
During the quarter under review, consolidated airline traffic — measured in revenue passenger miles — improved 7.2% year over year. Capacity (or available seat miles) rose 6%. Consolidated load factor (percentage of seat occupancy) was up 100 basis points to 82.7% as traffic growth outweighed capacity expansion. Average fuel price per gallon (on a consolidated basis) escalated 20.4% year over year to $2.30.
Total operating expenses jumped 13.4% year over year to $9,839 million in the reported quarter. Consolidated unit cost or cost per available seat mile (CASM) — excluding fuel, third-party business expenses, profit sharing and special charges — dipped 0.7% year over year. United Continental’s cash outflow (adjusted) at the end of the fourth quarter was $483 million.
Full-Year Results
The company reported adjusted earnings of $9.13 per share in 2018, beating the Zacks Consensus Estimate of $8.63. Revenues of $41.30 billion also trumped the Zacks Consensus Estimate of $41.18 billion. Moreover, both the top and the bottom line improved substantially year over year despite a fuel cost headwind of $2.4 billion in the year.
Q1 Outlook
The company anticipates capacity to expand between 5% and 6% while pre-tax margin (adjusted) is estimated in the range of 2.5-4.5%. Passenger unit revenues are projected to increase 0-3% year over year.
Meanwhile, consolidated average aircraft fuel price per gallon is envisioned between $2 and $2.05. Effective income tax rate for the quarter under consideration is likely to be in the 21-23% band.
Full-Year Outlook
United Continental expects 2019 earnings between $10 and $12 per share. The Zacks Consensus Estimate for full-year earnings stands at $10.65 per share. Capacity is estimated to expand 4-6% year over year. Additionally, effective income tax is forecast in the 21-23% band during the current year. Adjusted capital expenditures are anticipated to total approximately $4.7 billion in the year.
Zacks Rank & Other Key Picks
United Continental carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader Transportation sector are Azul (AZUL - Free Report) , Spirit Airlines (SAVE - Free Report) and ArcBest Corporation (ARCB - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Azul, Spirit and ArcBest have gained more than 16%, 26% and 4%, respectively, in a year.
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United Continental Holdings (UAL - Free Report) reported better-than-expected earnings and revenues in the fourth quarter of 2018. The company’s earnings (excluding 71 cents from non-recurring items) of $2.41 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line showed a massive year-over-year improvement.
Operating revenues came in at $10.49 billion, outpacing the Zacks Consensus Estimate of $10.37 billion. Additionally, the top line rose significantly year over year.
The strong earnings and revenue beat pleased investors. Consequently, the stock climbed more than 6% in after-hours trading on Jan 15.
Passenger revenues, accounting for bulk (91.1%) of the top line, increased 11.3%, highlighting strong demand for air travel. Cargo revenues ascended 3.1%, accounting for 3.2% of the top line. Revenues from other sources accounted for the balance.
Operating Results
Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) augmented 5% year over year to 13.87 cents. Total revenue per available seat mile increased 4.8% year over year to 15.23 cents. On a consolidated basis, average yield per revenue passenger mile inched up 3.8% from the year-ago quarter.
During the quarter under review, consolidated airline traffic — measured in revenue passenger miles — improved 7.2% year over year. Capacity (or available seat miles) rose 6%. Consolidated load factor (percentage of seat occupancy) was up 100 basis points to 82.7% as traffic growth outweighed capacity expansion. Average fuel price per gallon (on a consolidated basis) escalated 20.4% year over year to $2.30.
Total operating expenses jumped 13.4% year over year to $9,839 million in the reported quarter. Consolidated unit cost or cost per available seat mile (CASM) — excluding fuel, third-party business expenses, profit sharing and special charges — dipped 0.7% year over year. United Continental’s cash outflow (adjusted) at the end of the fourth quarter was $483 million.
Full-Year Results
The company reported adjusted earnings of $9.13 per share in 2018, beating the Zacks Consensus Estimate of $8.63. Revenues of $41.30 billion also trumped the Zacks Consensus Estimate of $41.18 billion. Moreover, both the top and the bottom line improved substantially year over year despite a fuel cost headwind of $2.4 billion in the year.
Q1 Outlook
The company anticipates capacity to expand between 5% and 6% while pre-tax margin (adjusted) is estimated in the range of 2.5-4.5%. Passenger unit revenues are projected to increase 0-3% year over year.
Meanwhile, consolidated average aircraft fuel price per gallon is envisioned between $2 and $2.05. Effective income tax rate for the quarter under consideration is likely to be in the 21-23% band.
Full-Year Outlook
United Continental expects 2019 earnings between $10 and $12 per share. The Zacks Consensus Estimate for full-year earnings stands at $10.65 per share. Capacity is estimated to expand 4-6% year over year. Additionally, effective income tax is forecast in the 21-23% band during the current year. Adjusted capital expenditures are anticipated to total approximately $4.7 billion in the year.
Zacks Rank & Other Key Picks
United Continental carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader Transportation sector are Azul (AZUL - Free Report) , Spirit Airlines (SAVE - Free Report) and ArcBest Corporation (ARCB - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Azul, Spirit and ArcBest have gained more than 16%, 26% and 4%, respectively, in a year.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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