United Airlines parent United Continental Holdings Inc. is scheduled to reveal first-quarter results on Monday, after the market closes, with Wall Street analysts expecting a year-over-year decline in profit per share for a fifth straight quarter.
The air carrier’s
recent investor update, in which the company said March close-in traffic was “better than expected,” suggests bottom-line results could beat consensus expectations, also for a fifth straight quarter.
The update, which was released on Monday, helped assuage some investor concerns in the aftermath of the public relations fiasco over the weekend, in which videos of a passenger being forcibly removed from a United plane, after refusing to be reaccommodated to a later flight, went viral.
Analyst Darryl Genovesi at UBS said United’s expectation that unit revenue will be flat with a year ago is unchanged from previous guidance, but could be seen as a “modest beat” as investors have grown more cautious in recent weeks.
Here is what investors can watch for in Monday’s report:
Earnings: United is expected to report adjusted earnings of 38 cents a share, according to the average estimate of 16 analysts surveyed by FactSet. That is down from EPS of $1.23 in the same period a year ago. The FactSet EPS consensus has increased from 34 cents as of the end of the fourth quarter on Dec. 30.
UBS’s Genovesi said United’s investor update implies EPS in the range of 35 cents to 45 cents, with the midpoint of 40 cents above analyst expectations.
United has beat the FactSet EPS consensus the past four quarters, after missing the previous three quarters before that.
Estimize, a crowdsourcing platform that gathers estimates from Wall Street analysts, as well as buy-side analysts, hedge-fund managers, company executives, academics and others, has a consensus earnings-per-share estimate of 37 cents, based on 38 estimates.
Revenue: The FactSet revenue consensus is $8.38 billion, up from $8.20 billion in the same quarter last year. As of Dec. 30, the FactSet consensus was $8.18 billion.
Those crowdsourced by Estimize are projecting, on average, revenue of $8.35 billion.
United has beat the FactSet revenue consensus the previous three quarters, and in eight of the past 11 quarters.
Stock price: United’s stock had traded in a relatively narrow range from mid-December through mid-March, as shares hovered just below the Dec. 20 record close of $76.05. It started selling off in mid-March as winter storm Stella slammed the Northeast and forced thousands of flight cancellations, to close at a four-month low of $65.28 on March 21.
The stock had bounced around after the weekend’s PR hit, to trade up as much as 1.7% at $71.52 on Monday and down 3.6% at $68.36 on Tuesday. On Thursday, it shed 1.2% to close at $69.07, or at the low end of the trading range. Read more about CEO Oscar Munuz’s apology.
United Airlines passenger violently removed from flight
A man was dragged off an overbooked United Airlines flight from Chicago O’Hare to Louisville, Ky, on Sunday night after agents couldn’t find volunteers to leave the plane and selected four passengers at random. A passenger captured video of the ordeal. Photo: Tyler Bridges via Storyful
United’s shares have edged higher the day after the past three quarterly reports by an average of about 0.8%.
The shares have lost 5.2% year to date, but have run up 22% over the past 12 months. In comparison, the NYSE Arca Airline Index
has rallied 17% over the past year and the S&P 500 index
has climbed 12%.
Warren Buffett’s Berkshire Hathaway Inc.
was United’s largest shareholder as of the start of the first quarter, with 28.95 million shares, or 9.2% of the shares outstanding, according to FactSet.
Other issues: Cowen & Co. analyst Helane Becker said that given United’s recent upbeat unit revenue outlook, which came despite an increase in capacity, she said she believes the company will guide to sequential improvement in unit revenue from the first quarter to the second quarter.
Other first-quarter financial metrics United is expected to report, according to FactSet:
• Passenger mainline revenue: $6.15 billion
• Passenger regional revenue: $1.37 billion
• Cargo revenue: $205.6 million
• Load factor: 79.7%