United Airlines Set to Release Q3 2024 Earnings: Key Insights and Projections

United Airlines (NASDAQ: UAL) is scheduled to announce its Q3 2024 financial results on Wednesday, October 16. Analysts predict the company will report revenues of $14.85 billion and earnings of $3.15 per share, slightly surpassing consensus expectations of $14.78 billion and $3.12, respectively. However, the airline likely experienced a decline in passenger yields accompanied by rising costs during the quarter. For a detailed look, check out our interactive dashboard analysis on United Airlines’ FY 2024 Q3 Earnings Preview.

Key Trends to Monitor in Q3

United Airlines is expected to benefit from increased capacity, although occupancy rates and yields may drop compared to last year. Additionally, the airline is likely facing higher non-fuel costs, particularly due to rising wages. Analysts anticipate that the passenger revenue per available seat mile (PRASM) will decrease by a low single-digit percentage year-over-year, settling at around $16.80 for Q3. Due to these rising costs, the company’s adjusted earnings per share (EPS) is projected to decline by 14%, reaching $3.15.

Review of United Airlines’ Q2 Performance

In Q2, United Airlines generated $15 billion in revenue, reflecting a year-over-year increase of 5.7%. The airline’s available seat miles rose by 8.3%, while PRASM dipped by 2.9%. The adjusted pre-tax margin contracted to 12.1% from 15.3% in Q2 2023. The adjusted EPS was reported at $4.14, down from $5.03 in the previous year. Average fuel costs increased by 3.8% year-over-year. For Q3, United Airlines estimates its adjusted EPS will range between $2.75 and $3.25.

Implications for UAL Stock

Overall, we believe UAL stock has limited growth potential. Our valuation places United Airlines’ shares at $64, indicating less than a 10% increase from the current price of approximately $60. This estimate is based on a P/E multiple of 6x for UAL and anticipated earnings of $9.94 per share on an adjusted basis for the full year 2024. The company has guided its adjusted EPS to fall within the range of $9.00 to $11.00.

A slight earnings beat in Q3 could lead to higher stock levels next week. However, it’s crucial to monitor any changes in earnings estimates and trends in yields and occupancy, as these factors may influence stock price movement in the short term.

Examining UAL’s stock performance over a longer period reveals inconsistency, with its annual returns being less volatile than those of the S&P 500. Interestingly, the Trefis High Quality (HQ) Portfolio, which consists of 30 stocks, has consistently outperformed the S&P 500 each year. The HQ Portfolio exhibits superior returns with reduced risk, offering a steadier investment experience compared to the benchmark index.

While growth prospects for United Airlines’ stock seem limited, it’s worthwhile to compare it against other United Airlines Peers based on crucial metrics. For further comparisons across different industries, visit our Peer Comparisons section.

[1] Returns as of 10/11/2024
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.