United Airlines (UAL – Free Report) continues to benefit from robust air travel demand. The company’s efforts to expand its global reach are commendable. Due to these tailwinds, UAL shares have performed impressively on the bourse. If you have not taken advantage of its share price appreciation yet, it’s time to do so.
Let’s delve deeper.
Factors Favoring UAL Stock
Robust Price Performance: The company’s price trend reveals that its shares have surged 135.9% over the past year, surpassing the industry’s 33.5% rise.
Image Source: Zacks Investment Research
Northward Estimate Revisions: The Zacks Consensus Estimate for earnings per share has been revised upward by 0.7% over the past 60 days for the fourth quarter of 2024. For 2024 and 2025, the consensus mark for earnings per share has moved 1% and 3.5% north in the same time frame. The favorable estimate revisions indicate brokers’ confidence in the stock.
Solid Zacks Rank: UAL currently carries a Zacks Rank #2 (Buy).
Bullish Industry Rank: The industry to which United Airlines belongs currently has a Zacks Industry Rank of 38 (out of 250). Such a favorable rank places it in the top 15% of Zacks Industries.Studies show that 50% of a stock price movement is directly related to the performance of the industry group it belongs to.
A mediocre stock within a strong group is likely to outclass a robust stock in a weak industry. Reckoning the industry’s performance becomes imperative.
Positive Earnings Surprise History: United Airlines has an encouraging earnings surprise history. The company’s earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 26.9%.
Growth Factors: United Airlines’ top line is bolstered by strong demand across key revenue segments. In the third quarter of 2024, the airline increased its traffic (measured in revenue passenger miles) by 2.7% year over year. To accommodate this surge in demand, UAL grew its capacity (measured in available seat miles) by 4.1%. However, as traffic did not outpace the expansion in capacity, the consolidated load factor (percentage of seat occupancy) decreased by 1.1 percentage points to 85.3%.
United Airlines’ significant network expansion showcases its strategic focus on meeting growing demand and enhancing its global reach. In the third-quarter of 2024, the company operated its largest-ever domestic schedule to the United States and Canada, with increases of 5.2% and 18.5%, respectively. It also launched its largest-ever schedule to Europe, including expanded services to Southern European destinations.
UAL introduced its first nonstop flight between New York/Newark and Dominica and added 145 flights for major events such as national conventions and sports games. The airline reinstated routes to Greenville, SC, San Francisco and St. Louis, MO, and continues to operate the largest U.S. mainland China network, with service to Shanghai from Los Angeles.
Moreover, the company’s agreement with SpaceX to provide free, high-speed Starlink Wi-Fi on more than 1,000 aircraft starting in late 2025 sets a new standard for in-flight connectivity. This move, alongside UAL’s largest international expansion in 2025, which adds eight new destinations, including underserved locations like Ulaanbaatar and Kaohsiung, strengthens its global network and enhances the customer experience.
Other Airline Stocks to Consider
Investors interested in the Zacks Airline industry may also consider Alaska Air Group (ALK – Free Report) and American Airlines (AAL – Free Report) .
Alaska Air Group currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. ALK has an expected earnings growth rate of 33.4% 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 23.2%. Shares of ALK have surged 73% in the past year.
American Airlines also sports a Zacks Rank #1 and has an expected earnings growth rate of 31.3% for the current year.
The company has an encouraging track record with respect to the earnings surprise, having surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missing once in the remaining quarter. The average beat is 124.4%. Shares of AAL have climbed 21.3% in the past year.
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