Winter has claimed another earnings victim.
This time, it’s United Continental.
Shares of the second-largest airline fell almost 10 percent Thursday after reporting mixed earnings results. The carrier reported a loss of $609 million, widening from $417 million a year earlier, and said canceled flights because of severe winter storms alone cut $200 million from the quarter’s bottom line.
But here’s the catch, American, Southwest and Delta suffered similar weather-driven fates this winter and beat their earnings forecasts. And airlines have been the best performing sector this year. So is weather a legitimate excuse?
According to one market participant, all signs point to sell.
“The results in the first quarter were absolutely terrible. They lost a ton of money even when you take out the weather-related issues. Every important metric was down,” said Marc Lichtenfeld, chief income strategist at The Oxford Club, who is bullish on the airline sector as a whole. “This is the worst property in a pretty nice neighborhood. I would avoid it.”
And in this case, the technicals are in agreement with the fundamentals.
Rich Ross of Auerbach Grayson, said the chart project a 25 percent decline from current levels.
“We’ve been on a phenomenal run from $3 down near the low,” noted Ross. “But this year we run into trouble with that very bearish triple top. That tells me we’re looking for a reversal in the primary trend.”
Ross’ advice, “You can still save yourself. Sell the stock right here.”
Check out the video for the full discussion on Thursday’s episode of CNBC’s “Street Signs.”