Does United Airlines Holdings, Inc. (UAL) Benefit From The Air Travel Boom?

We recently compiled a list of the Top 10 Airline Stocks Benefiting From The Air Travel Boom. In this article, we are going to take a look at where United Airlines Holdings, Inc. (NASDAQ:UAL) stands against the other airline stocks.

The aviation sector wasn’t short of optimism heading into the new year as air travel demand reached pre-covid highs and the holiday season showed promise. That optimism is now turning into reality as Delta Airlines announced its Q4 earnings result and surprised to the upside. The announcement has spurred a rally across airline stocks as expectations of other companies posting an earnings beat rise.

Delta reported improved operating margins of 12% vs 9.9% from a year ago. It improved the revenue per available seat mile from $0.1995 a year ago to $0.2004 in the last quarter. All of its international regions showed sequential improvement as revenue generated from international passengers grew at 6%. The company has also improved its guidance for the first quarter to $0.85 at the midpoint to the prior $0.76.

We now look at how this may affect other stocks across the industry.

A bird’s eye view of a large commercial jetliner taking off from an airport runway.

United Airlines Holdings, Inc. (NASDAQ:UAL)

United Airlines stock also surged after the earnings report of Delta Airlines. The company’s stock produced impressive returns of 138% last year, making it the 5th best-performing stock in the S&P 500. That trend is poised to continue in 2025.

Its 2025 EPS estimates stand at around $12, which means on a forward PE basis, the stock is trading at a multiple below 9. Moreover, the company has announced a new $1.5 billion share buyback program recently, which should help the company buy back about 5% of its total shares outstanding.

The company has a debt of over $25 billion against a cash balance of $14.4 billion. This may look worrisome, but the $10 billion in operating cash flow on an annual basis makes up for the extra debt on the books. UAL continues to be undervalued, though one could argue that airline stocks tend to remain undervalued for longer. The optimism caused by Delta’s earnings call should continue to drive the stock up till the company’s quarterly report comes out.

Overall UAL ranks 2nd on our list of the to airlines stocks benefiting from the air travel boom. While we acknowledge the potential of UAL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as UAL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.