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United Airlines (UAL - Free Report) is getting hit in 2022 by the Omicron outbreak, but this Zacks Rank #5 (Strong Sell) is still on track for positive earnings for the year.
United Airlines is an international airlines headquartered in Chicago. It has the most comprehensive route network among North American carriers, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C.???
A Big Beat in Q4 2021
On Jan 19, United reported fourth quarter results and easily beat the Zacks Consensus Estimate. Earnings were a loss of $1.60 compared to the estimate of a loss of $2.23.
That was a 28.3% beat.
It was United Airlines third consecutive beat in a row.
However, fourth quarter capacity was still down 23% compared to the fourth quarter of 2019, which was pre-pandemic.
The Recovery in the Airlines is Delayed
It's been over a year since the vaccines rolled out in the United States and most thought that travel would have returned close to its pre-pandemic level by now.
But business travel remains low and the Omicron outbreak hit demand.
United now expects full year 2022 capacity to be lower than 2019, but it will still be increasing capacity, just later in the year due to Omicron. The Omicron outbreak is hitting.
However, in better news, United has seen strong bookings for spring and beyond.
It will unground 52 Pratt & Whitney-powered Boeing 777s as demand returns throughout the year. But it means it will fly fewer available seat miles (ASMs) in 2022 than 2019.
Outlook for Q1 and Full Year 2022 Disappoints
With Omicron hitting, United forecast that first quarter capacity would be down 16% to 18% compared to the first quarter of 2019.
For the full year, capacity is expected to be down versus 2019.
As a result, the analysts have cut their 2022 earnings estimates.
4 estimates were cut in the last week, pushing down the 2022 Zacks Consensus Estimate to $0.59 from $1.40 in the last week.
That's still earnings growth of 104% as the company lost $13.94 in 2021.
2023 is looking even better, fingers crossed, with earnings expected to soar 1085% to $6.99.
Shares Still Under Perform
The airline stocks sold off big when the coronavirus hit. Warren Buffett even famously sold off all of his airline stocks soon after the March 2020 plunge.
Image Source: Zacks Investment Research
Like other stocks, they had a rebound in 2020, but shares are up just 7.2% over the last year.
In some good news for investors, they haven't plunged as badly as other stocks in 2022. Shares are down just 2.2% this year.
On a P/E basis, the shares aren't cheap at 69x.
But if you believe that travel really will rebound later this year, then United is one you might want to keep on your watch list.
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Bear of the Day: United Airlines (UAL)
United Airlines (UAL - Free Report) is getting hit in 2022 by the Omicron outbreak, but this Zacks Rank #5 (Strong Sell) is still on track for positive earnings for the year.
United Airlines is an international airlines headquartered in Chicago. It has the most comprehensive route network among North American carriers, including U.S. mainland hubs in Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington, D.C.???
A Big Beat in Q4 2021
On Jan 19, United reported fourth quarter results and easily beat the Zacks Consensus Estimate. Earnings were a loss of $1.60 compared to the estimate of a loss of $2.23.
That was a 28.3% beat.
It was United Airlines third consecutive beat in a row.
However, fourth quarter capacity was still down 23% compared to the fourth quarter of 2019, which was pre-pandemic.
The Recovery in the Airlines is Delayed
It's been over a year since the vaccines rolled out in the United States and most thought that travel would have returned close to its pre-pandemic level by now.
But business travel remains low and the Omicron outbreak hit demand.
United now expects full year 2022 capacity to be lower than 2019, but it will still be increasing capacity, just later in the year due to Omicron. The Omicron outbreak is hitting.
However, in better news, United has seen strong bookings for spring and beyond.
It will unground 52 Pratt & Whitney-powered Boeing 777s as demand returns throughout the year. But it means it will fly fewer available seat miles (ASMs) in 2022 than 2019.
Outlook for Q1 and Full Year 2022 Disappoints
With Omicron hitting, United forecast that first quarter capacity would be down 16% to 18% compared to the first quarter of 2019.
For the full year, capacity is expected to be down versus 2019.
As a result, the analysts have cut their 2022 earnings estimates.
4 estimates were cut in the last week, pushing down the 2022 Zacks Consensus Estimate to $0.59 from $1.40 in the last week.
That's still earnings growth of 104% as the company lost $13.94 in 2021.
2023 is looking even better, fingers crossed, with earnings expected to soar 1085% to $6.99.
Shares Still Under Perform
The airline stocks sold off big when the coronavirus hit. Warren Buffett even famously sold off all of his airline stocks soon after the March 2020 plunge.
Like other stocks, they had a rebound in 2020, but shares are up just 7.2% over the last year.
In some good news for investors, they haven't plunged as badly as other stocks in 2022. Shares are down just 2.2% this year.
On a P/E basis, the shares aren't cheap at 69x.
But if you believe that travel really will rebound later this year, then United is one you might want to keep on your watch list.