United Airlines is Tuesday's IBD Stock Of The Day, as the air carrier flew past a buy point following Delta Air Lines' decision to raise its 2023 outlook. UAL jumped Tuesday.
Early Tuesday, Delta Air Lines said it expects 2023 profit at the top end of its prior expectations, which ranged from $5 to $6 per share. The carrier earned $3.20 a share in 2022. Delta also boosted its revenue outlook to 17%-20% growth, compared with the prior forecast of a 15%-20% jump.
The carrier sees free cash flow at $3 billion for the year, up from its previous outlook of $2 billion. Delta predicted operating margins of 10%-12%, the top end of its previous forecast.
The air carrier also raised its second-quarter revenue growth target to 17%-18% from 15%-17%.
DAL stock hit a 52-week high. United Airlines stock broke out, along with American Airlines, which had guided higher on Q2 EPS in late May. Alaska Air Group also cleared a buy point.
Riding The Air Travel Rebound
United Airlines has seen sales grow over the past seven quarters. But profits have been mixed.
First-quarter revenue totaled $11.43 billion, rising 51% from last year. Meanwhile, a loss of 63 cents per share improved from a loss of $4.24 in Q1 2022.
The Chicago-based air carrier generated a record $3 billion in operating cash flow during the quarter. The airline also saw the lowest seat cancellation rate for the first quarter since 2012.
The airline's Q4 revenue and earnings both jumped more than expected by analysts. Earnings of $2.46 per share topped analysts' $2.10 target. Revenue came in at $12.4 billion, vs. the $12.23 estimate. Judged against the pre-pandemic benchmark of Q4 2019, United's operating margin increased by 14%. Revenue per seat mile swung 26% higher.
Like many air carriers, United had a run of losses during the Covid pandemic. However, now airlines are benefiting from a big rebound in travel with the end or curtailing of Covid restrictions.
"We are watching the macroeconomic risks carefully, but demand remains strong, especially internationally, where we are growing at twice the domestic rate," Chief Executive Scott Kirby told investors on April 18.
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United Airlines Stock Action
UAL advanced 5% to 56.03 on Tuesday during market trade, hitting a two-year high. United Airlines stock ascended past a cup-with-handle base buy point of 54.05, according to MarketSmith.
United Airlines stock bounced from its 10-day moving average during Monday trade and has now gained nearly 6% on the week. In June thus far, UAL has shot up 18%.
Meanwhile, AAL and ALK both surged above buy points. Both American Airlines and Alaska Air Group have formed cup-with-handle bases. AAL jumped 5.5% to 17.35, moving past a 16.72 entry. ALK advanced 4% to 51.94, topping a 51.02 buy point.
Delta shares rallied 6.8% Tuesday to 46.09, the highest since April 2022.
In addition to Delta's guidance, crude oil futures fell 1.7%, a positive sign for airlines' fuel costs.
United Airlines stock ranks fifth in IBD's Transportion-Airline industry group. UAL has a perfect Composite Rating of 99. Shares have a 94 Relative Strength Rating and a 73 EPS Rating.
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