United Airlines (NASDAQ: UAL) saw a significant increase in its net income, surging by 3.5 times year-over-year to $2.6 billion in 2023. This growth can be attributed to higher revenues and lower fuel costs. The company’s stock performance has also shown some positive gains, with UAL stock increasing by 15% from early 2021 to around $53 currently. However, the stock’s performance has not been consistent over the years, with returns of 1% in 2021, -14% in 2022, and 9% in 2023, underperforming the S&P 500 in certain years.
Despite the challenges faced by individual stocks in beating the S&P 500, United Airlines has shown improvements in its operating margins, with operating income more than doubling from $2.5 billion in 2022 to $5.3 billion in the last twelve months. The operating profit margin also expanded from 5.5% to 9.7%, with a decrease in total fuel expenses despite higher sales. The company’s net income also rose significantly from $737 million in 2022 to $2.6 billion in 2023, attributed to increased sales and disciplined spending.
Looking ahead, United Airlines has a solid outlook for 2024, with expected adjusted EPS in the range of $3.75 to $4.25 for Q2 and $9 to $11 for the full year. Revenue growth is expected to be driven by continued capacity expansion and elevated yields, with a 9% increase in available seat miles and a 1% rise in passenger revenue per available seat mile in Q1 2024. The company’s margin profile is expected to continue expanding in the coming years with disciplined spending and stable fuel prices, indicating further growth potential for UAL stock.
From a valuation perspective, UAL stock is estimated to have room for growth, with a valuation of $60 per share, reflecting over 10% upside from its current levels. Despite a 25% rise this year, United Airlines appears to have more potential for growth. It is important to consider how United Airlines’ peers fare on important metrics to get a better understanding of the company’s performance in comparison to others in the industry. Overall, United Airlines’ strong financial performance and growth outlook indicate a positive trajectory for the company and its shareholders in the coming years.
