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Here's Why Investors May Bet on United Airlines (UAL) Now
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United Airlines (UAL - Free Report) is benefiting from an uptick in air-travel demand (particularly on the leisure front). The upsurge in passenger volumes makes the UAL stock an attractive investment opportunity currently.
Let’s delve deep to unearth the factors working in favor of the Zacks Rank #1 (Strong Buy) stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter and current-year earnings has been revised 14.5% and 16.5% upward over the past 60 days, respectively. Such favorable estimate revisions reflect brokers’ confidence in the stock.
Given the wealth of information at brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because it serves as a key indicator in determining the price of a stock.
Buoyant Air-Travel Demand & Other Tailwinds: Improvement in air-travel demand bodes well for UAL. Passenger revenues, which account for the bulk of the top line, have been very strong with people taking to the skies again. Recently, management lifted earnings per share forecast for 2023, primarily driven by the rosy air-travel-demand scenario.
UAL's efforts to upgrade its fleet are commendable as well. In a bid to modernize its fleet, United Airlines placed the largest 787 Dreamliner order to Boeing in December 2022. UAL will purchase 100 Boeing 787 Dreamliners, with options to buy 100 more.
The new jets are expected to result in 25% improvement pertaining to fuel usage compared with the older Boeing 767 widebodies and some 777s that will be replaced. As a result of this massive deal, significant job opportunities for pilots, flight attendants and maintenance technicians among others are also likely to be created.
In response to the improved demand, United Airlines widened the scope of its code-sharing partnership with Azul (AZUL - Free Report) . Under the expanded deal, passengers can fly to six new destinations after connecting from the designated Brazilian airports 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. The expanded partnership between the two airline companies was built on their existing codeshare routes from Houston and Newark.
Impressive Price Performance: Driven by the uptick in demand, shares of UAL have gained 30.5% year to date compared with its industry’s growth of 12.1%.
Image Source: Zacks Investment Research
Bullish Industry Rank: The industry, to which UAL belongs, currently has a Zacks Industry Rank of 74 (of 250 plus groups). Such a solid rank places the company in the top 30% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a robust stock in a weak industry. Therefore, taking the industry’s performance into consideration becomes imperative.
Ryanair Holdings’ growth prospects are being supported by an upbeat in air-travel-demand scenario. An uptick in passenger volumes is leading the company to post impressive traffic numbers over the past few months.
Measures for expanding its fleet to cater to the rising travel demand are encouraging as well. Riding on the buoyant air-traffic scenario, RYAAY shares have gained 31.7% year to date. RYAAY surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters by 21.4%.
SkyWest's fleet-modernization efforts are commendable. A fall in operating expenses due to a decline in fuel costs is another tailwind for the company.
SkyWest’s environment-friendly approach also bodes well. SKYW shares have surged 154% year to date. SKYW surpassed the Zacks Consensus Estimate for earnings in three of the last four quarters (missing once). The average beat is 31.5%.
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Here's Why Investors May Bet on United Airlines (UAL) Now
United Airlines (UAL - Free Report) is benefiting from an uptick in air-travel demand (particularly on the leisure front). The upsurge in passenger volumes makes the UAL stock an attractive investment opportunity currently.
Let’s delve deep to unearth the factors working in favor of the Zacks Rank #1 (Strong Buy) stock.
Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter and current-year earnings has been revised 14.5% and 16.5% upward over the past 60 days, respectively. Such favorable estimate revisions reflect brokers’ confidence in the stock.
Given the wealth of information at brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because it serves as a key indicator in determining the price of a stock.
Buoyant Air-Travel Demand & Other Tailwinds: Improvement in air-travel demand bodes well for UAL. Passenger revenues, which account for the bulk of the top line, have been very strong with people taking to the skies again. Recently, management lifted earnings per share forecast for 2023, primarily driven by the rosy air-travel-demand scenario.
UAL's efforts to upgrade its fleet are commendable as well. In a bid to modernize its fleet, United Airlines placed the largest 787 Dreamliner order to Boeing in December 2022. UAL will purchase 100 Boeing 787 Dreamliners, with options to buy 100 more.
The new jets are expected to result in 25% improvement pertaining to fuel usage compared with the older Boeing 767 widebodies and some 777s that will be replaced. As a result of this massive deal, significant job opportunities for pilots, flight attendants and maintenance technicians among others are also likely to be created.
In response to the improved demand, United Airlines widened the scope of its code-sharing partnership with Azul (AZUL - Free Report) . Under the expanded deal, passengers can fly to six new destinations after connecting from the designated Brazilian airports 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. The expanded partnership between the two airline companies was built on their existing codeshare routes from Houston and Newark.
Impressive Price Performance: Driven by the uptick in demand, shares of UAL have gained 30.5% year to date compared with its industry’s growth of 12.1%.
Image Source: Zacks Investment Research
Bullish Industry Rank: The industry, to which UAL belongs, currently has a Zacks Industry Rank of 74 (of 250 plus groups). Such a solid rank places the company in the top 30% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.
In fact, an ordinary stock in a strong group is likely to outperform a robust stock in a weak industry. Therefore, taking the industry’s performance into consideration becomes imperative.
Other Stocks to Consider
Investors interested in the Zacks Airline industry may also consider stocks like Ryanair Holdings (RYAAY - Free Report) and SkyWest (SKYW - Free Report) . While Ryanair sports a Zacks Rank #1 at present, SkyWest carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ryanair Holdings’ growth prospects are being supported by an upbeat in air-travel-demand scenario. An uptick in passenger volumes is leading the company to post impressive traffic numbers over the past few months.
Measures for expanding its fleet to cater to the rising travel demand are encouraging as well. Riding on the buoyant air-traffic scenario, RYAAY shares have gained 31.7% year to date. RYAAY surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters by 21.4%.
SkyWest's fleet-modernization efforts are commendable. A fall in operating expenses due to a decline in fuel costs is another tailwind for the company.
SkyWest’s environment-friendly approach also bodes well. SKYW shares have surged 154% year to date. SKYW surpassed the Zacks Consensus Estimate for earnings in three of the last four quarters (missing once). The average beat is 31.5%.