United Airlines (UAL) Stock: What to Expect from Q2 Earnings Today

TLDR

• United Airlines reports Q2 earnings after market close Wednesday, July 15
• Analysts expect EPS of $1.88 on revenue of $17.6 billion
• Oil prices jumped 13% this week as U.S.-Iran tensions escalate
• UAL stock is down over 10% in July, falling in 8 of the last 9 trading sessions
• UBS says capacity outlook and Q4 revenue guidance are the two key metrics to watch

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United Airlines reports Q2 earnings after the close Wednesday, and the timing could not be more dramatic. Oil prices have surged 13% this week as hostilities between the U.S. and Iran have intensified, throwing a wrench into what was already a complicated setup for the sector.

United Airlines Holdings, Inc., UAL

UAL stock is down more than 4% this week and roughly 11% in July. It has fallen in eight of the last nine trading sessions. The stock was trading around $39 billion in market cap heading into the print.

Analysts are expecting EPS of $1.88 on revenue of $17.6 billion for Q2. That EPS figure would represent a year-over-year drop of around 52%, even as revenue is forecast to grow 15.3% compared to the same period last year.

For Q3, Wall Street is looking for a stronger showing — EPS of $3.52 on sales of $17.6 billion. UBS analyst Atul Maheswari had been watching for $3 to $4 EPS guidance from the company, but he noted this week that the surge in jet fuel makes that range hard to pin down right now.

The backdrop has shifted fast. Delta reported Friday and failed to lift the sector. The Global JETS ETF is down 7% this month. United now carries the weight of the sector’s narrative on its shoulders.

What the Numbers Say

Historically, UAL has beaten EPS estimates 100% of the time over the last two years and topped revenue forecasts 75% of the time. That track record gives bulls something to point to, even in a tough environment.

The current P/E ratio sits at 10.75x, below historical median levels, which some investors see as a sign the stock is undervalued. GuruFocus gives UAL a GF Score of 79/100, with solid marks for growth (8/10) and profitability (7/10), though financial strength comes in at just 5/10.

Higher airfares, strong demand, and capacity cuts have helped airlines offset rising fuel costs in recent quarters. United is still up 25% over the past three months, so the longer-term picture has not been entirely bleak.

Insider Activity Worth Noting

One flag for investors: insiders have sold $10.8 million worth of UAL stock over the past three months, with no purchases reported in the same window. No single data point tells the whole story, but it’s worth factoring in.

UBS points to two metrics as the most important from Wednesday’s report — United’s capacity outlook and its implied revenue expectations for Q4. Those will likely set the tone for how the stock trades Thursday morning.

Delta’s report was a damp squib. All eyes are on United now.