Considering thebelief that United Airlines' purchasing opportunity has passed, here's the major justification suggesting there's still potential available.
Investors might be questioning if the soar of over 135% in 2024 for United Airlines stock warrants a pause. Though chart patterns lack memory, the true value assessment lies in earnings and future potential. And guess what? It's not too late to jump on the United Airlines bandwagon. Here's why:
United's Ascent in 2025
With Delta Air Lines dishing out their Q4 2024 earnings, it sets a stage for a read-across for United Airlines. Good news: Delta's management echoed that the aviation industry is amping up their financial health, creating a favorable environment. This bodes well for United and other premium carriers, as it suggests they're keeping a firm grip on overcapacity and maintaining pricing power.
Delving a bit further, Delta's Q2 report highlighted an impressive demand surge in transatlantic flights, which happens to be a significant strength for United Airlines. Not to mention, Delta's management disclosed a surge in corporate travel and stronger spending, which is fantastic news for United, as their clientele includes many high-margin corporate travelers.
A Bargain in the Making
If the read-across plays out, it might just sprinkle some upside potential into analysts' predictions for 2025. Presently, the consensus anticipates an EPS of $10.34 in 2024 and $12.72 in 2025, implying a 23.3% growth on a forward P/E ratio of 8.2 times 2025 earnings. This might be inexpensive, but imagine if those earnings projections ever surge...
United Airlines' current price-to-earnings ratio of 11.42 could buy you a piece of the sky. But if we look at the forward P/E of 8.37, we may spot opportunities for future earnings growth to manifest in the stock price.
While United Airlines isn't a basic flight simulator, with a few intentional twists and turns, the journey into 2025 appears promising.
Given the positive financial health of the aviation industry and United Airlines' specific strengths, such as a surge in transatlantic flights and corporate travel, investors might consider allocating some of their money or finance towards investing in United Airlines stock. If the company's earnings surpass current projections, the stock price could potentially skyrocket, offering substantial returns on investment.
