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United Airlines Stock Surges 133% Year to Date: More Upside Ahead?

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Shares of United Airlines (UAL - Free Report) have performed exceedingly well on the bourse so far this year. Shares of this Chicago-based company have skyrocketed 133.5% year to date, outperforming its industry’s 36.9% growth.

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Given this excellent price performance, let us delve deep to unearth the reasons behind this and also find out if there is further scope for upside.

Improvement in air travel demand following the end of the pandemic bodes well for United Airlines' top line. While air travel demand is particularly strong on the leisure front, business travel has also made an encouraging comeback. Owing to buoyant air-travel demand, United Airlines posted a significant year-over-year increase (5.7%) in revenues during the first nine months of 2024. This year-over-year increase in the top line was driven by 5.3% rise in passenger revenues (accounting for 90.9% of the top line).

Driven by the uptick in bookings to European destinations, UAL expects to carry 25 million passengers during the holiday period, up 6% from the year-ago level. In the event of this expectation materializing, 2024 would represent the busiest holiday period yet for UAL.

United Airlines’ environmentally-friendly approach is commendable as well.  UAL aims to achieve net-zero emissions by 2050 without relying on traditional carbon offsets. In response to the improvement in air-travel demand, United Airlines widened the scope of its code-sharing partnership with Azul (AZUL). Under the expanded deal, passengers can fly to six new destinations after connecting from the designated airports of Brazil to Orlando or Fort Lauderdale on UAL flights. The six new destinations are Chicago, Cleveland, Denver, San Francisco, Washington DC and Los Angeles. The customer-friendly move will allow them to travel using a single ticket for both UAL and Azul-operated flights. Low fuel costs are also supporting UAL’s bottom line.

With air-travel demand expected to remain healthy, UAL stock should continue to perform well on the bourse going forward as well.

Estimate Revisions Moving North

Driven by upbeat air-travel demand, earnings per share estimates for United Airlines are expected to move 8%, 4.6% and 5.9% upward for fourth-quarter 2024, full-year 2024 and full-year 2025, respectively.

 

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UAL’s Zacks Rank

United Airlines currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Investors interested in the Zacks Transportation sector may consider Westinghouse Air Brake Technologies (WAB - Free Report) and SkyWest (SKYW - Free Report) .

Westinghouse Air Brake Technologies currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

WAB has an expected earnings growth rate of 2% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an average beat of 9.46%. Shares of WAB have risen 73.6% in the past year.

SkyWest presently sports a Zacks Rank #1. SKYW has an expected earnings growth rate of 4.07% for the current year.

The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 79.12%. Shares of SKYW have climbed 147.5% in the past year.


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