United Airlines (NASDAQ: UAL) will report its Q2 2023 results on Wednesday, July 19. We expect the company’s revenues to come in at $14.0 billion, slightly ahead of the consensus estimate of $13.9 billion. This would mark year-over-year growth of about 16%. Earnings are likely to come in at about $4.12 on a per-share and adjusted basis, slightly above the $4.04 consensus estimate. See our interactive dashboard analysis on United Airlines Earnings Preview for more details on how United Airlines’ revenues and earnings will likely trend for the quarter. So, what are some of the trends that are likely to drive United Airlines’ results?
The company will likely continue to benefit from the robust travel demand. It should see a continued rise in total available seat miles, and the passenger load factor will likely remain strong. However, it will be a tough comparison with the prior-year quarter, which saw a record travel demand. The average ticket price has also cooled this year while overall capacity has expanded. Looking at Q1 2023, United Airlines’ revenues were up 51%, led by a 62% rise in passenger revenue. While the ASMs were up 23% in Q1, passenger revenue per available seat mile surged 31% to 15.63 cents.
Looking at the bottom line, United Airlines reported a $0.63 loss per share on an adjusted basis in Q1, compared to a $4.24 loss per share in the prior-year quarter. The average fuel price for the company stood at $3.33 in Q1, and it should be lower in Q2 vs. its prior-year figure of $4.18. The average U.S. Gulf Coast Kerosene Jet fuel price per gallon fell from $3.90 (end of June last year) to $2.20 now. Now that fuel prices have cooled compared to last year, the company will likely see a positive operating margin and earnings. It has guided for $3.50 to $4.00 earnings in Q2.
Although we expect United Airlines to navigate well in Q2, we believe there is little room left for growth in its stock. We estimate United Airlines’ valuation to be $60 per share, reflecting only an 8% upside from its current price of $55. Our forecast is based on a 6x P/E multiple for UAL and expected earnings of $9.83 on a per-share and adjusted basis for the full-year 2023.
While United Airlines stock has little room for gains, check out how other United Airlines Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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