At the most recent investor conference that the company participated in, the Bernstein 38th Annual Strategic Decisions Conference on June 1, 2022, UAL commented that "even if you look at the data on our operating margin in the second quarter, and we're in the early innings of this recovery." Stocks: Real-time U.S. stock quotes reflect trades reported through Nasdaq only; comprehensive quotes and volume reflect trading in all markets and are delayed at least 15 minutes.

~ Howard Marks. net cash stocks, net-nets, low P/B stocks, sum-of-the-parts discounts) and wide moat stocks (i.e. International stock quotes are delayed as per exchange requirements. United Airlines' operating revenue jumped by +135% YoY from $3,221 million in the first quarter of 2021 to $7,566 million in the recent quarter. Those who believe that the pendulum will move in one direction forever or reside at an extreme forever eventually will lose huge sums. UAL is a Buy prior to the release of upcoming Q2 2022 earnings. I expect positive surprises to lead to a substantial re-rating of the company's shares, when United Airlines' actual profit margins for 2023 and 2026 exceed market expectations. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. United Airlines had guided for the company to deliver positive pre-tax profits in the second quarter of 2022 and full-year 2022, which will mark a return to profitability for UAL. Those who understand the pendulum's behavior can benefit enormously. The upwards revision in TRASM guidance in May and encouraging comments from management at the June investor conference give me the confidence that UAL's upcoming quarterly financial results will exceed market expectations. This suggests that United Airlines is making good progress in its recovery from the pandemic. Source: FactSet, Markets Diary: Data on U.S. Overview page represent trading in all U.S. markets and updates until 8 p.m. See Closing Diaries table for 4 p.m. closing data. Sources: FactSet, Dow Jones, ETF Movers: Includes ETFs & ETNs with volume of at least 50,000. Copyright FactSet Research Systems Inc. All rights reserved.

Asia Value & Moat Stocks is a research service for value investors seeking Asia-listed stocks with a huge gap between price and intrinsic value, leaning towards deep value balance sheet bargains (i.e. Thirdly, there were worries that business travel might never return to normalized levels prior to the pandemic outbreak. Please. I have no business relationship with any company whose stock is mentioned in this article. I discuss about UAL's profitability and financial performance for 2022 and beyond in the rest of this article. If you have an ad-blocker enabled you may be blocked from proceeding. buying earnings power at a discount in great companies like "Magic Formula" stocks, high-quality businesses, hidden champions and wide moat compounders). Change value during the period between open outcry settle and the commencement of the next day's trading is calculated as the difference between the last trade and the prior day's settle. FactSet (a) does not make any express or implied warranties of any kind regarding the data, including, without limitation, any warranty of merchantability or fitness for a particular purpose or use; and (b) shall not be liable for any errors, incompleteness, interruption or delay, action taken in reliance on any data, or for any damages resulting therefrom. Cryptocurrencies: Cryptocurrency quotes are updated in real-time. buying earnings power at a discount in great companies like "Magic Formula" stocks, high quality businesses, hidden champions and wide moat compounders). At its late-April 2022 first-quarter investor call, UAL guided for "the best TRASM (Total Revenue Per Available Seat Mile) and highest quarterly revenue in our history" and "a 10% operating margin" for Q2 2022. Looking for more investing ideas like this one? The FY 2023 target pre-tax margin of 9% appears to be realistic, as United Airlines' pre-COVID pre-tax margin was 9.4% for FY 2019 and the company is on the road to recovery as detailed in this article.

buying assets at a discount e.g. Source: FactSet, Indexes: Index quotes may be real-time or delayed as per exchange requirements; refer to time stamps for information on any delays. Data are provided 'as is' for informational purposes only and are not intended for trading purposes. buying assets at a discount e.g. Secondly, United Airlines' guidance for positive income on a pre-tax basis for the upcoming quarter and full year represents a key inflection point in profitability for the company. Sources: FactSet, Dow Jones, Bonds: Bond quotes are updated in real-time. Source: Kantar Media, Extraordinaries & Discontinued Operations. But UAL's encouraging business travel metrics and positive outlook for business travel revenue suggest that such concerns are overdone.

Asia Value & Moat Stocks is a research service for value investors searching for attractive Asia-listed investment opportunities with a huge gap between price and intrinsic value, leaning towards both deep value balance sheet bargains (i.e. UAL's key operating metrics, ASMs (Available Seat Miles) and PRASM (Passenger revenue per available seat mile), grew by +75% YoY and +56% YoY to 53.3 billion and $0.1192, respectively in Q1 2022. Sources: CoinDesk (Bitcoin), Kraken (all other cryptocurrencies), Calendars and Economy: 'Actual' numbers are added to the table after economic reports are released. Sources: FactSet, Tullett Prebon, Currencies: Currency quotes are updated in real-time. As mentioned earlier in this article, UAL was loss-making in eight of the last nine quarters. Firstly, UAL is expecting its Q2 2022 TRASM to be +17% higher than what it was in Q2 2019. Source: FactSet.

Earlier, UAL announced the company's Q1 2022 results on April 2022, and its most recent quarterly financial performance was decent. Similar to other companies in the aviation industry, United Airlines was adversely affected by lockdowns and border restrictions put in place to combat the COVID-19 pandemic in the past two years or so. United Airlines disclosed in a prior press release issued on July 1, 2022 that the company will be reporting its upcoming Q2 2022 earnings on Wednesday, July 20, 2022 after trading hours. In contrast, sell-side analysts project that United Airlines will achieve much lower pre-tax profit margins of 5.7% in FY 2023 and 9.8% in FY 2026, as per S&P Capital IQ. This positive view is also validated by United Airlines' comments at the Q1 2022 results briefing on April 21, 2022, where the company stressed that "we finally reached the inflection point as we transition from pandemic to endemic.". Before carrying out a preview of United Airlines' Q2 2022 earnings, I analyze the key metrics revealed as part of UAL's Q1 2022 financial results first in the current section. Is this happening to you frequently? I am not receiving compensation for it (other than from Seeking Alpha). In other words, there is a mismatch between United Airlines' management guidance and investors' expectations. Fundamental company data and analyst estimates provided by FactSet. UAL stock is a Buy. Sources: FactSet, Dow Jones, Stock Movers: Gainers, decliners and most actives market activity tables are a combination of NYSE, Nasdaq, NYSE American and NYSE Arca listings. In summary, the strong YoY growth for the key financial and operating metrics, and the very marginal top line and bottom line misses, suggest that UAL is on the path to recovery. Even though United Airlines issued strong guidance for Q2 2022 and signaled a return to profitability for full-year 2022, the market doesn't have much confidence in the company meeting its 2023 and 2026 pre-tax margin targets. UAL was loss-making in eight of the past nine quarters since the beginning of 2022, and this was no surprise considering how COVID-19 had impacted air travel. Data may be intentionally delayed pursuant to supplier requirements. Uncover cheap stocks, great businesses listed in Asia focusing on HongKong. In comparison, United Airlines' Q1 2022 TRASM was -3% below pre-COVID levels. All rights reserved. Please disable your ad-blocker and refresh.

But this is supported by the company's cost optimization initiatives which target $2 billion in expense savings implying a reduction in CASM (Cost Per Available Seat Mile) by -8% between FY 2019 and FY 2026, and expectations of a full recovery in the global aviation industry by then. In addition, the company noted at the quarterly results briefing that business travel revenue had recovered to 80% of pre-pandemic levels at the time of the call in April, and it guided for "business TRASM contribution" to return to "100% of 2019 levels soon.". This makes UAL a Buy-rated stock in my opinion. net cash stocks, net-nets, low P/B stocks, sum-of-the-parts discounts) and wide moat stocks (i.e. Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I expect positive surprises to lead to a substantial re-rating of the company's shares, when United Airlines' actual profit margins for 2023 and 2026 exceed market expectations. Mutual Funds & ETFs: All of the mutual fund and ETF information contained in this display, with the exception of the current price and price history, was supplied by Lipper, A Refinitiv Company, subject to the following: Copyright Refinitiv. United Airlines' non-GAAP adjusted net operating loss halved YoY from -$2,758 million in Q1 2021 to -$1,384 million in the most recent quarter, which was better than the Wall Street analysts' consensus forecast of -$1.41 billion as per S&P Capital IQ. 2022 guidance was impressive, investors still don't think that UAL can deliver on its 2023 and 2026 profitability guidance as seen with consensus numbers. UAL has guided for the company to generate non-GAAP adjusted pre-tax profit margins of 9% and 14% in FY 2023 and FY 2026, respectively at its June 2021 Investor Day. UAL hasn't been making a profit for full-year FY 2020 and FY 2021, according to historical financial data sourced from S&P Capital IQ. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. In conclusion, I expect United Airlines to deliver strong TRASM growth (as compared to pre-COVID levels in 2019) and positive earnings in Q2 2022. I have no business relationship with any company whose stock is mentioned in this article. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Separately, UAL's non-GAAP adjusted net loss per share narrowed substantially from -$7.50 in Q1 2021 to -$4.24 in Q1 2022, which was a marginal miss (-0.6%) as compared to the sell-side's consensus bottom line projection of -$4.22 per share. There are three key takeaways from United Airlines' management guidance and commentary as per its first quarter earnings call.

Sources: FactSet, Tullett Prebon, Commodities & Futures: Futures prices are delayed at least 10 minutes as per exchange requirements. Bernstein 38th Annual Strategic Decisions Conference. Change value during other periods is calculated as the difference between the last trade and the most recent settle. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. More specifically, United Airlines suffered from losses in eight of the last nine quarters between Q1 2020 and Q1 2022. Get them exclusively at Asia Value & Moat Stocks.

The company's first quarter top line missed the market's consensus revenue estimate of $7.68 billion slightly by -1.4%.

As per S&P Capital IQ data, United Airlines' non-GAAP adjusted operating profit margin for Q2 2019 was 13.5%, which is +3.5 percentage points higher than its Q2 2022 operating margin guidance of 10.0%. The company also maintained its 10% operating profit margin guidance. In my opinion, United Airlines is well-positioned to beat market expectations in terms of pre-tax margins for FY 2023 and FY 2026 based on a review of Q1 2022 metrics and Q2 2022 guidance, and this will drive a positive re-rating of its shares. I wrote this article myself, and it expresses my own opinions.

I wrote this article myself, and it expresses my own opinions. Sign up here to get started today! I assign a Buy investment rating to United Airlines (NASDAQ:UAL). In a nutshell, UAL's key Q1 2022 financial metrics largely met market expectations. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. The company also performed well on other metrics. UAL is a Buy before upcoming earnings, as I think that the company is well-positioned to meet its 2023 and 2026 profitability targets. I am not receiving compensation for it (other than from Seeking Alpha). In mid-May 2022, United Airlines revised the company's Q2 2022 TRASM guidance upwards with expectations that its TRASM in the second quarter this year will be +23%-25% (versus +17% as per earlier guidance) better than what it achieved two years ago.

UAL's FY 2026 pre-tax margin goal of 14% is slightly more ambitious. Although United Airlines' Q1 2022 metrics were good and its Q2 2022 guidance was impressive, investors still don't think that UAL can deliver on its 2023 and 2026 profitability guidance as seen with consensus numbers. That was mainly attributable to the $1.1 billion in grant income recognized in Q3 2021 relating to "Payroll Support Program agreements under the CARES Act" as highlighted in its Q3 2021 results press release. In the past two years, the company was only profitable in the third quarter of 2021.

United Airlines also noted at the call that it expects to generate positive pretax earnings for both Q2 2022 and full-year FY 2022. This makes UAL a Buy-rated stock in my opinion.