UAL Corporation (UAUA) recently rebounded from a key trend line after hitting a new multi-year high above $24 in mid June. Estimates are up huge over the last few months and the valuation picture could hardly be any better with a forward P/E of 5X.
Company Description
UAL Corporation, through its subsidiaries, provides air transportation services. The company was founded in 1934 and has a market cap of $3.45 billion.
Airlines stocks have been on fire for the last year as the economy has shown big signs of improvement. That sentiment recently pushed shares of UAUA to a new multi-year high, helped by better than expected Q2 results from late April.
First-Quarter Results
Revenue for the period was up 15% from last year to $4.24 billion. And although the company did report a loss of 55 cents for the quarter, that was well ahead of the Zacks Consensus Estimate calling for a loss of 90 cents. UAL now has an average earnings surprise of 33% over the last year.
The company showed signs of progress in two key areas, with passenger unit revenue up 19% from last year and Cargo and other revenues up 13%.
Although UAL does have a substantial amount of debt, its balance sheet continues to perk up. Its unrestricted cash balance of $4.5 billion gives it one of the strongest liquidity positions in the industry.
Estimates Climbing
With the company’s business showing some solid signs of improving, analysts have been raising estimates. The current year is up $2.08 in the last three months to $4.27. The next-year estimate is pegged at $5.30, a bullish 24% growth projection.
Valuation
With estimates on the upswing, the valuation picture is looking very solid, with a forward P/E of 5X compared to the industry average of 13X.
The Chart
UAUA recently rebounded from a key trend line after hitting a new multi-year high above $24 in mid June. Look for more support from the trend line on any weakness. Also, below the chart, the stochastic is signaling that shares are deep in over sold territory, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service. Zacks Investment Research
