Market Inference Overview -- UAL Stock

Now trading at a price of $52.87, United Airlines has moved -2.7% so far today.

United Airlines returned gains of 4587.7% last year, with its stock price reaching a high of $58.23 and a low of $31.58. Over the same period, the stock outperformed the S&P 500 index by 3371.0%. More recently, the company's 50-day average price was $52.43. United Airlines Holdings, Inc., through its subsidiaries, provides air transportation services in North America, Asia, Europe, Africa, the Pacific, the Middle East, and Latin America. Based in Chicago, IL, the large-cap Consumer Discretionary company has 92,795 full time employees. United Airlines has not offered a dividend during the last year.

The Company Has a Highly Leveraged Balance Sheet and a Declining EPS Growth Trend:

2020-02-25 2021-03-01 2022-02-18 2023-02-16
Revenue (MM) $43,259 $15,355 $24,634 $44,955
Gross Margins 38.3% -11.0% 18.4% 33.9%
Operating Margins 10.5% -58.4% -17.8% 5.5%
Net Margins 6.96% -46.04% -7.97% 1.64%
Net Income (MM) $3,009 -$7,069 -$1,964 $737
Net Interest Expense (MM) -$598 -$942 -$1,541 -$1,375
Depreciation & Amort. (MM) -$2,288 -$2,488 -$2,485 -$2,456
Earnings Per Share $11.58 -$25.3 -$6.07 $7.85
EPS Growth n/a -318.48% 76.01% 229.32%
Diluted Shares (MM) 260 279 324 328
Free Cash Flow (MM) $11,388 -$2,412 $4,067 $10,678
Capital Expenditures (MM) -$4,479 -$1,721 -$2,000 -$4,612
Net Current Assets (MM) -$32,886 -$38,788 -$41,312 -$40,404
Current Ratio 0.55 1.16 1.19 1.0
Long Term Debt (MM) $18,311 $30,046 $35,732 $32,857
Net Debt / EBITDA 3.54 -11.4 8.25 6.79

United Airlines's financial statements include several red flags such as slimmer gross margins than its peers, consistently negative margins with a negative growth trend, and declining EPS growth. Additionally, the firm has a highly leveraged balance sheet. On the other hand, the company has generally positive cash flows working in its favor. Furthermore, United Airlines has weak revenue growth and a flat capital expenditure trend.

United Airlines Is Reasonably Valued:

United Airlines has a trailing twelve month P/E ratio of 6.7, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $12.0, the company has a forward P/E ratio of 4.4. The 0.7% compound average growth rate of United Airlines's historical and projected earnings per share yields a PEG ratio of 9.34. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing United Airlines in terms of its equity because its P/B ratio is 2.51 while the sector average is 3.12. The company's shares are currently trading -13.4% below their Graham number.

Analysts Give United Airlines an Average Rating of Buy:

The 15 analysts following United Airlines have set target prices ranging from $50.0 to $86.0 per share, for an average of $71.29 with a buy rating. As of April 2023, the company is trading -26.5% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

United Airlines has an average amount of shares sold short because 6.5% of the company's shares are sold short. Institutions own 68.6% of the company's shares, and the insider ownership rate stands at 0.42%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 14% stake in the company is worth $2,006,191,550.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.