The Heart of the Earnings Cycle
In the midst of the 2024 Q1 earnings season, a busy schedule awaits investors this week. Thus far, the period has been rather positive, with no alarming reports from the major banks to unsettle the market.
United Airlines Performance
United Airlines (UAL) surprised with a substantial 71% beat on the Zacks Consensus EPS estimate, reporting sales slightly above expectations. These figures soared over last year. Remarkably, UAL could have turned a profit for the quarter if not for a $200 million hit from the grounding of Boeing 737 MAX 9.
Consumer interest in travel remains robust, illustrated by UAL’s 9.1% year-over-year capacity increase. Furthermore, lower fuel costs have contributed significantly to profitability, with prices dropping from $3.13 to $2.88 per gallon.
The company stood by its previous forecast, anticipating an adjusted EPS in the $9-$11 range for the full-year 2024. Investors reacted positively, propelling the shares higher post-announcement.
American Airlines Projections
Earnings estimates for American Airlines (AAL) have seen an upward revision with the current Zacks Consensus EPS estimate at -$0.28, climbing from -$0.32 at the close of March. Revenue projections have shown a positive trend throughout the year, with an anticipated $12.6 billion, slightly exceeding the $12.5 billion expected in January.
Notably, AAL has consistently surpassed expectations recently, outperforming the consensus EPS estimate by an average of 120% in its last four releases.
Southwest Airlines Outlook
Conversely, Southwest Airlines (LUV) has faced a less optimistic earnings outlook, with the Zacks Consensus EPS estimate dropping to -$0.31, significantly lower than the mid-March estimate of -$0.19. Revenue forecasts, however, have shown more positivity, with expectations around $6.4 billion, a 3% increase.
Similar to AAL, LUV has been on a solid earnings trajectory, surpassing consensus EPS expectations by an average of 52% across its last four releases.
Key Takeaway
As we await the earnings reports of American Airlines (AAL) and Southwest Airlines (LUV) this week, the guidance from United Airlines (UAL) may offer insight into consumer trends.
UAL’s recent robust performance, driven by capacity growth and lower fuel costs, serves as a positive indication for the airline industry. It is important to note that the Boeing 737 MAX grounding, affecting UAL, does not impact LUV or AAL due to their aircraft choices.
Where Will Stocks Go…
If Biden Wins? If Trump Wins?
The unforeseen outcomes may prove intriguing. Since 1950, despite negative midterm years, presidential election years have often yielded market growth, regardless of the winning party, highlighting voter engagement and market bullishness.
Now is the perfect time to explore Zacks’ Special Report showcasing 5 stocks with significant growth potential, catering to both Democratic and Republican investor preferences.
- Medical manufacturer showcasing a remarkable growth of +11,000% in the past 15 years.
- Rental company dominating its sector effortlessly.
- Energy powerhouse planning to boost its substantial dividend by 25%.
- Aerospace and defense standout bagging a potential $80 billion contract.
- Giant Chipmaker expanding its production with significant plants in the U.S.
