UAL: SeekingAlpha

 

United Airlines Holdings: This Stock Is Ready To Fly

United Airlines is one of the best run companies in the airline industry, and the company's stock looks cheap by looking at key metrics. United Airlines trades at a current price to earnings ratio of just 9.5, the company trades at .6 times sales, and management recently report that the company has access to significant liquidity of over $20 billion. The company easily beat earnings estimates last quarter as well, and management was very conservative looking forward with management refusing to issue forward revenue guidance. The company remains very bullish and committed to ramping up cap ex over the next several years, with many new airline purchases.

United Airlines traditionally trades at around 11-12x forwards earnings estimates, and the company was able to consistently earn between 7-9 dollars a share pre-pandemic, which is why the stock surpassed $100 as hare before the pandemic hit air travel hard in 2020. Obviously the company will have to manage debt and deal with overhead that wasn't as significant pre-pandemic, but the company's current capital position remains strong with a $20 billion dollar revolver.

The Airline industry was very difficult to invest in for decades, but United Airlines Holdings was one of the best performing stocks in the market pre-pandemic. United Airlines Holdings saw its share price rose over 300% from 2008 to 2019, from around $30 a share, to over $100 a share. The recent invasion of Ukraine by Russia has caused the broader markets to pull back in the short-term, but the long-term fundamental for United and the airline industry remain very strong with COVID restrictions being eased significantly. United Airlines Holdings has a bold plan to aggressive spend on new airplanes and to continue to add capacity over the next several years, and this company appears to be spending at the right time as COVID related travel restrictions ease and corporate earnings remain strong. Well short-term volatility often makes investors fearful, that fear often creates strong long-term opportunities as well.