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Will United Continental's (UAL) Q1 Earnings Cheer Investors?

Zacks Equity Research

United Continental Holdings UAL is scheduled to report first-quarter 2019 results on Apr 16, after market close.

In the last reported quarter, the company delivered a positive earnings surprise of 29.6%. Revenues also surpassed expectations. Both the metrics improved on a year-over-year basis.

This apart, the company has an impressive earnings history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters, the average beat being 9%.

With the Zacks Consensus Estimate for first-quarter earnings having revised upward by almost 71% over the past 90 days, things seem to be rosy for the company.

Let’s delve deep to unearth the factors likely to influence this Chicago-based carrier’s results in the soon-to-be-reported quarter.

We expect the company’s passenger revenues to improve on the strong demand for air travel. As a result, total revenues should benefit as passenger revenues account for bulk of the top line. The company is also expected to perform well on the unit revenue front. It anticipates passenger unit revenues to be nearly at the mid-point of the 0-3% range in first-quarter 2019.

Additionally, with oil prices moderating, fuel costs might be less of a hindrance in the quarter to be reported. United Continental expects fuel price per gallon in the $2-$2.05 range in the same period, which compares favorably with $2.30 reported in the fourth quarter of 2018.

However, high labor costs are likely to bump up operating expenses, which in turn might limit bottom-line growth.

United Continental Holdings, Inc. Price and EPS Surprise

 

United Continental Holdings, Inc. Price and EPS Surprise | United Continental Holdings, Inc. Quote

What Does the Zacks Model Say?

Our proven model shows that United Continental is likely to beat on earnings in first-quarter 2019 as it has the perfect combination of the following two key ingredients:

Earnings ESP: United Continental has an Earnings ESP of +3.52% as the Most Accurate Estimate of 98 cents exceeds the Zacks Consensus Estimate by 4 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: United Continental currently carries a Zacks Rank #3 (Hold). Notably, the stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have significantly higher chances of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conversely, stocks with a Zacks Rank #4 or 5 (Sell rated) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Key Picks

Investors interested in the Zacks Transportation sector may also consider Air Lease Corporation AL, Ryder System R and Werner Enterprises WERN as these stocks too possess the right mix of elements to beat on earnings in the next releases.

Air Lease has an Earnings ESP of +4.41% and a Zacks Rank of 3. The company will report first-quarter results on May 9.

Ryder has an Earnings ESP of +3.44% and a Zacks Rank of 3. The company is scheduled to release first-quarter earnings on Apr 30.

Werner Enterprises has an Earnings ESP of +3.27% and a Zacks Rank of 3. The company will report its first-quarter financial numbers on Apr 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

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United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
 
Ryder System, Inc. (R) : Free Stock Analysis Report
 
Air Lease Corporation (AL) : Free Stock Analysis Report
 
Werner Enterprises, Inc. (WERN) : Free Stock Analysis Report
 
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