We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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 (UAL) Down 6.4% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for United Airlines (UAL - Free Report) . Shares have lost about 6.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is United due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Narrower-Than-Expected Loss in Q2
United Airlines incurred a loss (excluding $2.57 from non-recurring items) of $3.91 per share in the second quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $4.17. This is the sixth consecutive quarterly loss incurred by the company as the pandemic continues to dent air-travel demand.
Operating revenues of $5,471 million surpassed the Zacks Consensus Estimate of $5,306.9 million. The top line surged more than 100% year over year owing to 541.1% increase in passenger revenues to $4,366 million. The upside reflects on improvement in air-travel demand. Moreover, cargo revenues surged 50.7% year over year to $606 million. Revenues from other sources also surged 27.3% to $499 million.
Operating Results
Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) increased 45% year over year to 11.02 cents. Total revenue per available seat mile (TRASM) declined 16.1% to 13.81 cents. On a consolidated basis, average yield per revenue passenger mile declined 33.2% to 15.31 cents from the year-ago quarter’s figure.
Consolidated airline traffic, measured in revenue passenger miles, surged 860.1% year over year as more people took to the skies. Capacity (measured in available seat miles) expanded 342%. Consolidated load factor (percentage of seat occupancy) improved 38.9 percentage points year over year to 72% as traffic increase was more than capacity expansion. Moreover, average aircraft fuel price per gallon increased 66.9% year over year to $1.97. Owing to the uptick in air travel demand following increased vaccinations, fuel gallons consumed were up 206.4% to 625 million.
Adjusted operating costs escalated 27.3% year over year. Consolidated unit cost or cost per available seat mile (CASM) excluding fuel, third-party business expenses, profit-sharing and special charges, dropped 71.2%.
United Airlines exited second-quarter 2021 with cash and cash equivalents of $20.8 billion compared with $11.27 billion at the end of 2020. Long-term debt at the end of the reported quarter was $32.3 billion compared with $24.84 billion at the end of December 2020. The company exited the quarter with total available liquidity of approximately $23 billion.
Outlook
United Airlines anticipates third-quarter 2021 TRASM growth to be positive. Additionally, capacity is likely to indicate a decline around 26% from third-quarter 2019 levels. The metric is expected to increase 39% on a quarter-over-quarter basis.
Fuel price per gallon is estimated to be approximately $2.17.
The carrier anticipates September-end quarter CASM (excluding fuel, profit sharing, third-party business expenses, and special charges) to be up by approximately 17% from third-quarter 2019 figures. The upside is likely to be driven by lower stage length and lower gauge of its network.
Adjusted pre-tax income is expected to be positive for both third- and fourth-quarter 2021.
The carrier anticipates 2022 CASM-excluding fuel, profit sharing, third-party business expenses and special charges to be lower than 2019 levels. The company expects continued gains as more businesses return by the end of summer and also next year, with a full recovery in demand anticipated by 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 63.18% due to these changes.
VGM Scores
At this time, United has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, United has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
United (UAL) Down 6.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for United Airlines (UAL - Free Report) . Shares have lost about 6.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is United due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Narrower-Than-Expected Loss in Q2
United Airlines incurred a loss (excluding $2.57 from non-recurring items) of $3.91 per share in the second quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $4.17. This is the sixth consecutive quarterly loss incurred by the company as the pandemic continues to dent air-travel demand.
Operating revenues of $5,471 million surpassed the Zacks Consensus Estimate of $5,306.9 million. The top line surged more than 100% year over year owing to 541.1% increase in passenger revenues to $4,366 million. The upside reflects on improvement in air-travel demand. Moreover, cargo revenues surged 50.7% year over year to $606 million. Revenues from other sources also surged 27.3% to $499 million.
Operating Results
Consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenues) increased 45% year over year to 11.02 cents. Total revenue per available seat mile (TRASM) declined 16.1% to 13.81 cents. On a consolidated basis, average yield per revenue passenger mile declined 33.2% to 15.31 cents from the year-ago quarter’s figure.
Consolidated airline traffic, measured in revenue passenger miles, surged 860.1% year over year as more people took to the skies. Capacity (measured in available seat miles) expanded 342%. Consolidated load factor (percentage of seat occupancy) improved 38.9 percentage points year over year to 72% as traffic increase was more than capacity expansion. Moreover, average aircraft fuel price per gallon increased 66.9% year over year to $1.97. Owing to the uptick in air travel demand following increased vaccinations, fuel gallons consumed were up 206.4% to 625 million.
Adjusted operating costs escalated 27.3% year over year. Consolidated unit cost or cost per available seat mile (CASM) excluding fuel, third-party business expenses, profit-sharing and special charges, dropped 71.2%.
United Airlines exited second-quarter 2021 with cash and cash equivalents of $20.8 billion compared with $11.27 billion at the end of 2020. Long-term debt at the end of the reported quarter was $32.3 billion compared with $24.84 billion at the end of December 2020. The company exited the quarter with total available liquidity of approximately $23 billion.
Outlook
United Airlines anticipates third-quarter 2021 TRASM growth to be positive. Additionally, capacity is likely to indicate a decline around 26% from third-quarter 2019 levels. The metric is expected to increase 39% on a quarter-over-quarter basis.
Fuel price per gallon is estimated to be approximately $2.17.
The carrier anticipates September-end quarter CASM (excluding fuel, profit sharing, third-party business expenses, and special charges) to be up by approximately 17% from third-quarter 2019 figures. The upside is likely to be driven by lower stage length and lower gauge of its network.
Adjusted pre-tax income is expected to be positive for both third- and fourth-quarter 2021.
The carrier anticipates 2022 CASM-excluding fuel, profit sharing, third-party business expenses and special charges to be lower than 2019 levels. The company expects continued gains as more businesses return by the end of summer and also next year, with a full recovery in demand anticipated by 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 63.18% due to these changes.
VGM Scores
At this time, United has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, United has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.