What’s Next For UAL Stock After An Upbeat Q4?

United Airlines stock (NASDAQ: UAL) recently reported its Q4 results, with revenues and earnings exceeding the street estimates. The company reported revenue of $14.7 billion and adjusted earnings of $3.26 per share, compared to the consensus estimates of $14.4 billion and $3.01, respectively. The company’s outlook for 2025 broadly aligned with the street estimates. Still, its stock didn’t see any meaningful change post the results announcement.

UAL stock, with 162% gains since the beginning of 2024, has significantly outperformed the broader markets, with the S&P500 index up 28%. A strong travel demand, uptick in corporate travel, and upbeat results over the recent quarters have driven the UAL stock price. Now, if you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

United Airlines’ revenue of $14.7 billion in Q4 was up 7.8% y-o-y. This was led by increased capacity, with average seat miles up 6.3%, and a 0.6% rise in passenger revenue per seat mile. The company saw its adjusted EBITDA margin rise to 15.9% in Q4’24 from 12.9% in the prior-year quarter. Although its fuel costs fell 19.3% y-o-y, its non-fuel costs, including wages and aircraft maintenance, trended higher. The company’s bottom line stood at $3.26 on an adjusted basis, versus $2.00 in Q4’23.

Looking forward, United Airlines expects its 2025 adjusted EPS to be in the range of $11.50 and $13.50, compared to the consensus estimate of $12.56. Overall, United Airlines reported a good Q4 and provided an in-line guidance for 2025.

What Does This Mean For UAL Stock?

UAL stock didn’t see much of a change post the Q4 announcement, partly due to strong gains it has seen over the last year or so. Even if we look at a slightly longer period, the increase in UAL stock over the last four-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 1% in 2021, -14% in 2022, 9% in 2023, and 135% in 2024.

In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last four-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment around rate cuts and changes in the White House, could UAL face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months — or will it see a strong jump? While we will soon update our model for UAL to reflect the latest results, from a valuation perspective, we think the positives are already priced in.

At its current levels of $108, UAL stock is already trading at 0.6x trailing revenues, compared to the stock’s average P/S ratio of 0.5x revenues over the last five years. Overall, while UAL has had a solid run over the last twelve months, and it has posted an upbeat Q4. But, we think investors are likely to be better off waiting for a dip to pick the stock for robust long-term gains.

While United Airlines stock looks like it is appropriately priced, check out how other United Airlines Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 1/23/2025
[2] Cumulative total returns since the end of 2016

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