United Airlines (UAL) Laps the Stock Market: Here’s Why

In the latest trading session, United Airlines (UAL) closed at $101.16, marking a +1.69% move from the previous day. The stock outpaced the S&P 500’s daily gain of 1.1%. At the same time, the Dow added 0.91%, and the tech-heavy Nasdaq gained 1.35%.

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Coming into today, shares of the airline had gained 2.74% in the past month. In that same time, the Transportation sector lost 6.52%, while the S&P 500 gained 0.22%.

The investment community will be paying close attention to the earnings performance of United Airlines in its upcoming release. In that report, analysts expect United Airlines to post earnings of $2.97 per share. This would mark year-over-year growth of 48.5%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $14.4 billion, up 5.68% from the year-ago period.

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UAL’s full-year Zacks Consensus Estimates are calling for earnings of $10.27 per share and revenue of $56.77 billion. These results would represent year-over-year changes of +2.19% and +5.68%, respectively.

Any recent changes to analyst estimates for United Airlines should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.45% higher within the past month. United Airlines is holding a Zacks Rank of #2 (Buy) right now.

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Looking at its valuation, United Airlines is holding a Forward P/E ratio of 9.68. For comparison, its industry has an average Forward P/E of 10.28, which means United Airlines is trading at a discount to the group.

We can also see that UAL currently has a PEG ratio of 1.08. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company’s projected earnings growth. The Transportation – Airline was holding an average PEG ratio of 1 at yesterday’s closing price.

The Transportation – Airline industry is part of the Transportation sector. This industry, currently bearing a Zacks Industry Rank of 29, finds itself in the top 12% echelons of all 250+ industries.

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