Is United Airlines Stock Poised For Sizable Gains?

by Trefis Team
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UAL
United Airline Holdings
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The shares of United Airlines (NASDAQ: UAL) continue to trade 30% below pre-Covid levels despite a substantial improvement in air travel demand. Notably, passenger numbers at TSA checkpoints are almost 20% below 2019 figures – highlighting the ongoing recovery in the travel and tourism sector. The company has received a third round of payroll support from the U.S. government to assist employee salaries through September 30, 2021. During this pandemic period, the company reported $4 billion of operating cash outflow and Trefis believes that the stock can observe strong gains if investors overlook pandemic losses. Our prior analysis, Should You Consider United Airlines Stock For A Bull Rally?, highlights the key aspects in favor of an upside in United Airlines stock.

But how would these numbers change if you are interested in holding United Airlines stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test United Airlines stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF UAL stock moved by -5% over 5 trading days, THEN over the next twenty-one trading days, UAL stock moves an average of 4.2 , with a 62% probability of a positive return

Some Fun Scenarios, FAQs & Making Sense of United Airlines Stock Movements:

Question 1: Is the average return for United Airlines stock higher after a drop?

Answer:

Consider two situations,

Case 1: United Airlines Holdings stock drops by -5% or more in a week

Case 2: United Airlines Holdings stock rises by 5% or more in a week

Is the average return for United Airlines Holdings stock higher over the subsequent month after Case 1 or Case 2?

UAL stock fares better after Case 1, with an average return of 4.2% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 0% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how United Airlines Holdings stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold United Airlines Holdings stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For UAL stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although UAL stock appears to be an exception to this general observation.

UAL’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for United Airlines Holdings stock by changing the inputs in the charts above.

Do United Airlines’ peers offer better gains? United Airlines Stock Comparison With Peers summarizes how UAL compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

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