United Continental’s (UAL) adjusted EPS (earnings per share) in 4Q14 increased from $0.78 to $1.20, a ~54% increase. Nevertheless, it missed analysts’ target by a slight 0.5% this quarter after exceeding analysts’ estimates for four consecutive quarters.
Wall Street analysts estimated that United’s 4Q14 adjusted EPS would come in at $1.22. The company’s initiatives to improve efficiency through network optimization and cost reduction has paid off. United generated higher margins and earnings per share growth.
Estimates for 1Q15
United showed considerable profitability improvement in 2014. Its operating margin increased to 6.1% in 2014 from 3.3% in 2013, and its net margin increased to 2.9% from 1.5%. Also in 2014, EPS almost doubled to $2.93, from $1.53 in 2013.
United Continental Holdings (UAL), which operates United Airlines, reported a diluted EPS in 2014 that was higher than Delta Air Lines’ (DAL) $0.78, JetBlue Airways’ (JBLU) $1.19, and Southwest Airlines’ (LUV) $1.64. Meanwhile, its diluted EPS was lower than American Airlines’ (AAL) $3.93 and Alaska Air Group’s (ALK) $4.42.
Wall Street analysts’ estimate for 1Q15 suggest that United will continue to perform well in 2015:
- revenue – $8,635 million, slightly lower than in 1Q14
- operating profit – $695.8 million
- net profit –$454.8 million
- EPS – $1.17
In contrast, United reported a loss in 1Q14.
Out of the 20 Wall Street analysts who cover United, 16 recommend a “buy” for the stock, giving it an upside of 28% from the current price.
Investors can invest in airline stocks by either buying shares of individual companies or ETFs that hold a portfolio of diverse stocks. ETFs that hold airline stocks include the iShares Transportation Average ETF (IYT) and the SPDR S&P Transportation ETF (XTN).