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United Airlines (UAL) Up on Bullish Q2 Unit Revenue Guidance

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Shares of United Airlines (UAL - Free Report) were up in early trading following an improved unit revenue projection for the June quarter owing to the healthy air-travel demand scenario.

In an SEC filing dated May 16, management projected total revenue per available seat miles (TRASM: a measure of unit revenue) for second-quarter 2022 to increase in the 23-25% band from the second-quarter 2019 actuals. Per the previous TRASM forecast, given last month while releasing first-quarter 2022 results, the metric was expected to increase roughly 17% from the second-quarter 2019 actuals. The uptick in bookings, mainly for leisure, led to this improved guidance.

All other predictions for the June quarter of 2022 are also made with respect to second-quarter 2019. Capacity is now projected to decline roughly 14% from the second-quarter 2019 levels (earlier forecast had predicted a contraction of roughly 13%). Non-fuel unit costs are now projected to increase in the 16-17% band (earlier forecast had called for a roughly 16% increase). Adjusted operating margin is still expected to be around 10%.

However, due to rising oil price, this Chicago-based carrier, currently carrying a Zacks Rank #3 (Hold), increased its average aircraft fuel price per gallon forecast for the June quarter. United Airlines now expects the metric to be $4.02, higher than the previous estimate of $3.43.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Picks

Belowwepresentsome better-ranked stocks in the Zacks Transportation sector, which are GATX Corporation (GATX - Free Report) , C.H. Robinson Worldwide (CHRW - Free Report)  and Golar LNG Limited (GLNG - Free Report) )

GATX has a trailing four-quarter surprise of 40.8%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters.  We are upbeat about its efforts to reward its shareholders despite coronavirus-led woes. In January this year, GATX raised its quarterly dividend by 4% to 52 cents per share. The hiked dividend highlights its commitment to boosting shareholder value, and underpins its solid financial footing and sunny prospects.

Driven by the tailwinds, the stock has risen 13.9% in the past year.  GATX currently carries a Zacks Rank #2 (Buy).

The expected long-term earnings per share (three-to-five years) growth rate for C.H. Robinson is pegged at 9%. Improving freight market conditions are aiding CHRW. In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing and handsome profits in ocean freight.

Driven by the positives, the stock has rallied 9.8% in the past year.  CHRW currently sports a Zacks Rank #1.

Golar LNG has a trailing four-quarter surprise of 50%, on average, with its earnings having surpassed the Zacks Consensus Estimate in three of the last four quarters (one miss). GLNG is benefiting from an improved shipping performance. The shipping unit has been performing well so far, aiding its top line.

Driven by the upsides, the stock has soared 108% in the past year.  GLNG currently flaunts a Zacks Rank of 1.