Fuel Prices To Weigh On United Airlines Stock In The Near Term

+9.64%
Upside
43.30
Market
47.48
Trefis
UAL: United Airlines Holdings logo
UAL
United Airlines Holdings

The shares of United Airlines (NASDAQ: UAL) observed a strong rally in recent weeks assisted by pent-up travel demand and declining coronavirus infections. However, the benchmark oil prices have surged by 26% from $75/bbl in early January to $95/bbl at present – weighing on the bottom line of all transportation companies. Per annual filings, aircraft fuel accounts for 22% of the total United Airlines’ operating expenditure – making it the second biggest cost head after salaries & wages. Given the company’s thin net margin of less than 10%, a sudden rise in fuel prices will weigh on earnings and subsequently shareholder returns in the near-term. Per the Trefis machine learning engine which analyses historical stock price movements, UAL stock has a 47% chance of a rise over the next month (21 trading days). See our analysis United Airlines Stock Chance of Rise for more details.

Five Days: UAL 9.7%, vs. S&P 500 -1.9%; Outperformed market (5% event probability)

  • UAL stock gained 9.7% over a five-day trading period ending 02/14/2022, compared to the broader market (S&P500) which declined 1.9% over the same period.
  • Returns of 9.7% or higher over a five-day period on 130 occasions out of 2517 (5%); Stock rose in the next five days in 65 of these 130 instances (50%).
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Ten Days: UAL 15%, vs. S&P 500 -0.4%; Outperformed market (4% event probability)

  • UAL stock gained 15% over the last ten trading days (two weeks), compared to the broader market (S&P500) which declined 0.4%.
  • Returns of 15% or higher over 10-day period on 112 occasions out of 2517 (4%); Stock rose in the next 10 days in 63 of these 112 instances (56%).

Twenty-One Days: UAL 0.9%, vs. S&P 500 -6.5%; Outperformed market (50% event probability)

  • UAL stock gained 0.9% over the last twenty-one trading days (about one month), compared to the broader market (S&P500) which lost 6.5%.
  • Returns of 0.9% or higher over 21-day period on 1264 occasions out of 2516 (50%); Stock rose in the next 21 days in 592 of these 1264 instances (47%).

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Returns Feb 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 UAL Return 10% 7% -36%
 S&P 500 Return -2% -7% 97%
 Trefis MS Portfolio Return 1% -9% 259%

[1] Month-to-date and year-to-date as of 2/14/2022
[2] Cumulative total returns since the end of 2016

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