A month has gone by since the last earnings report for United Airlines (UAL Quick QuoteUAL - Free Report) . Shares have added about 3.2% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Loss Narrows in Q1

United Airlines reported first-quarter 2023 loss of 63 cents per share, narrower than the Zacks Consensus Estimate of a loss of 73 cents. In the year-ago quarter, UAL had incurred a loss of $4.24 per share.

Operating revenues of $11,429 million beat the Zacks Consensus Estimate of $11,420.9 million. UAL’s revenues increased 51.1% year over year due to upbeat air-travel demand. The year-over-year increase in the top line was driven by a 61.8% rise in passenger revenues (accounting for 89.8% of the top line) to $10,274 million. Nearly 37 million passengers traveled on UAL flights in the first quarter.

Cargo revenues fell 36.5% year over year to $398 million. Revenues from other sources increased 28.1% from the first quarter of 2022 to $757 million.

Consolidated passenger revenue per available seat mile (a key measure of unit revenues) increased 31.1%. Total revenue per available seat mile rose 22.5% to 17.39 cents. The average yield per revenue passenger mile increased 19.1% to 19.56 cents.

Consolidated airline traffic, measured in revenue passenger miles, grew 35.9%, while capacity, measured in available seat miles, grew 23.4%. Consolidated load factor (percentage of seat occupancy) inched up 7.3 percentage points to 79.9%.

The average aircraft fuel price per gallon jumped 15.6% to $3.33. Fuel gallons consumed were up 22.8% from the first quarter of 2022 actuals.

Adjusted operating expenses increased 23.3% to $8,243 million. Operating expenses (on a reported basis) increased 28.3% to $11,472 million. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, fell 0.1% to 12.54 cents.

United Airlines exited the first quarter with cash and cash equivalents of $7,634 million compared with $7,166 million at the end of the prior quarter. Long-term debt at the end of the reported quarter was $27,460 million compared with $28,283 million at the end of the prior quarter.

Outlook

For the second quarter of 2023, United Airlines expects capacity to improve by almost 18.5% from the year-ago reported figure.

Total revenues are anticipated to grow 14-16% year over year. UAL expects second-quarter earnings per share in the $3.50-$4.00 band. UAL forecasts the average aircraft fuel price per gallon in the $2.80-$3.00 band.

For 2023, United Airlines expects capacity to stay in the high teens. CASM, excluding fuel, third-party business expenses, profit-sharing and special charges is expected to remain flat. Adjusted capital expenditures are expected to be around $8.5 billion. UAL expects 2023 EPS in the $10-$12 band.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 6.95% due to these changes.

VGM Scores

At this time, United has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 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.