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Here's Why Investors Should Give United Airlines Stock a Miss Now

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Key Takeaways

  • Earnings estimates for UAL dropped 8.97% for 2025 and 5.03% for 2026 over the past 60 days.
  • UAL's Q1 expenses rose 1.3% to $12.6B due to higher labor and landing fee costs.
  • A current ratio of 0.78 highlights liquidity concerns, with cash levels insufficient for short-term needs.

United Airlines (UAL - Free Report) is grappling with elevated operating expenses and weak liquidity, hampering the company’s financial prospects and making it an unattractive choice for investors’ portfolios.

Let’s delve deeper.

UAL: Key Risks to Watch

Southward Earnings Estimate Revision: The Zacks Consensus Estimate for current-year earnings has moved 8.97% south in the past 60 days. For the next year, the consensus mark for earnings has been revised 5.03% downward in the same time frame. The unfavorable estimate revisions indicate brokers’ lack of confidence in the stock.

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Image Source: Zacks Investment Research

Dim Price Performance:  The company’s price trend reveals that its shares have dropped 24.2% year to date compared with the Transportation - Airlineindustry’s 10.7% fall.

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Image Source: Zacks Investment Research

Weak Zacks Rank: United Airlines currently carries a Zacks Rank #4 (Sell).

Headwinds: The company’s financial stability is challenged by elevated expenses and weak liquidity. In the first quarter of 2025, total operating expenses rose 1.3% year over year to $12.6 billion. This surge in expenses was primarily due to escalated labor costs and landing fees.

Labor costs, comprising salaries and related costs, accounting for 33% of the total operating expenses, increased 5.7% year over year. Landing fees and other rent rose 8.6% year over year.

Moreover, UAL exited the quarter with a current ratio (a measure of liquidity) of 0.78. A current ratio of less than 1 is undesirable as it indicates that the company does not hold sufficient cash to meet its short-term obligations.Bottom of Form

Stocks to Consider

Investors interested in the Transportation sector may consider Copa Holdings (CPA - Free Report) and Ryanair (RYAAY - Free Report) .

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

CPA has an expected earnings growth rate of 14.3% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 5.5%. Shares of CPA have risen 17.9% year to date.

RYAAY currently carries a Zacks Rank of #2.

RYAAY has an expected earnings growth rate of 30.5% for the current year. The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering an average beat of 46.6%. Shares of RYAAY have rallied 26.2% year to date.


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Ryanair Holdings PLC (RYAAY) - free report >>

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Copa Holdings, S.A. (CPA) - free report >>

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