It has been about a month since the last earnings report for United Airlines (UAL Quick QuoteUAL - Free Report) . Shares have added about 2.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is United due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Earnings Beat in Q4

United Airlines' fourth-quarter 2022 earnings of $2.46 per share beat the Zacks Consensus Estimate of $2.07. In the year-ago quarter, UAL incurred a loss of $1.60 per share when air-travel demand was not as buoyant as in the current scenario. The fourth quarter of 2022 was the third consecutive profitable quarter at UAL since the onset of the pandemic.

Operating revenues of $12,400 million beat the Zacks Consensus Estimate of $12,230 million. UAL’s revenues increased 51.37% year over year owing to upbeat air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.9% from fourth-quarter 2019 (pre-coronavirus) levels.

The massive year-over-year increase in the top line was driven by 62.9% rise in passenger revenues (accounting for 90.3% of the top line) to $11,202 million. Moreover, passenger revenues increased 12.8% from fourth-quarter 2019 reading. Nearly 39 million passengers traveled on UAL flights in the December quarter. This implied that passenger volume was 90% of the pre-pandemic volume.

Cargo revenues skyrocketed 49.4% from fourth-quarter 2019 actuals to $472 million. Revenues from other sources increased 13.6% from the fourth quarter of 2019 to $726 million.

Other Details of Q4

Below, we present all comparisons (in % terms) with fourth-quarter 2019 figures unless otherwise stated.

Consolidated passenger revenue per available seat mile (a key measure of unit revenues) increased 24.6%. Total revenue per available seat mile (TRASM) rose 25.8% to 19.29 cents. The average yield per revenue passenger mile was up 20.8% to 20.46 cents.

Consolidated airline traffic, measured in revenue passenger miles, dropped 6.6%, while capacity, measured in available seat miles, fell 9.5%. Consolidated load factor (percentage of seat occupancy) inched up 2.7 percentage points to 85.2%.

The average aircraft fuel price per gallon jumped 68.6% to $3.54. Fuel gallons consumed were down 12.6% from fourth-quarter 2019 actuals.

Adjusted operating expenses increased 0.7% to $7,529 million. Operating expenses (on a reported basis) increased 9.9% to $11,023 million. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, ascended 11.2% to 11.71 cents.

United Airlines, currently carrying a Zacks Rank #2 (Buy), exited the fourth quarter with cash and cash equivalents of $7,166 million compared with $11,258 million at the end of the prior quarter. Long-term debt at the end of the reported quarter was $28,283 million compared with $28,490 million at the end of the prior quarter.

Outlook

For the first quarter of 2023, United Airlines expects capacity to improve by around 20% from the year-ago reported figure. TRASM is anticipated to grow almost 25% year over year. CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is expected to decline in the range of 3-4%.

Total revenues are anticipated to grow almost 50% year over year. UAL expects first-quarter earnings per share in the $0.5-$1.00 band. The Zacks Consensus Estimate for first-quarter earnings is currently pegged at 10 cents.

UAL forecasts the average aircraft fuel price per gallon to be $3.19 in the first quarter.

For 2023, United Airlines expects capacity to stay in the high teens. TRASM is anticipated to remain flat. CASM, excluding fuel, third-party business expenses, profit-sharing and special charges, is expected to remain flat.

Total revenues are anticipated to stay in the high teens. UAL expects 2023 earnings per share in the $10-$12 band. The Zacks Consensus Estimate for 2023 earnings is currently pegged at 46.92.

UAL forecasts the average aircraft fuel price per gallon in the $2.85-$2.90 band for 2023. The adjusted pre-tax margin is expected to be 9%. Adjusted capital expenditures are expected to be around $8.5 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

The consensus estimate has shifted 612.54% due to these changes.

VGM Scores

Currently, United has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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. It comes with little surprise United has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

United is part of the Zacks Transportation - Airline industry. Over the past month, Delta Air Lines (DAL Quick QuoteDAL - Free Report) , a stock from the same industry, has gained 1.7%. The company reported its results for the quarter ended December 2022 more than a month ago.

Delta reported revenues of $13.44 billion in the last reported quarter, representing a year-over-year change of +41.9%. EPS of $1.48 for the same period compares with $0.22 a year ago.

For the current quarter, Delta is expected to post earnings of $0.32 per share, indicating a change of +126% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.9% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Delta. Also, the stock has a VGM Score of A.