Last Tuesday, United Airlines UAL reported strong fourth-quarter 2024 results, driven by upbeat air travel demand, improved pricing power and lower fuel prices. The company's earnings outlook for the first quarter of 2025 and full-year 2025 were also promising.

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The upbeat results and the rosy outlook naturally give rise to the question as to whether investors should add UAL stock to their portfolios now for healthy returns or wait for a better entry point? Before we check the investment worthiness of United Airlines stock, let us take a look at the company’s fourth-quarter performance in brief.

Highlights of Q4 Earnings

United Airlines reported fourth-quarter 2024 earnings (excluding 31 cents from non-recurring items) of $3.26 per share, which surpassed the Zacks Consensus Estimate of $3.01. The bottom line increased 63% on a year-over-year basis. Operating revenues of $14.7 billion beat the Zacks Consensus Estimate of $14.4 billion. The top line increased 7.8% year over year, driven by a 6.9% rise in passenger revenues. Upbeat passenger volumes during the winter holiday period boosted the top line in the quarter. The Chicago-based carrier's transatlantic bookings for the 2024 winter were 30% higher than pre-COVID levels.

UAL’s results benefited from strong demand for the more expensive business class seats. Upbeat international travel demand also aided results. Additionally, this Chicago-based carrier’s substantial investment in its loyalty program paid off with loyalty revenues increasing 12% year over year in the fourth quarter of 2024.

Cargo revenues, too, were impressive, up 30% year over year. In the December quarter, sales of its premium and basic economy seats were up 10% and 20% year on year, respectively. Corporate bookings rose 7% from a year ago.

UAL is the second S&P 500 member in the Zacks Airline industry to report fourth-quarter results, after Delta Air Lines’ DAL impressive results on Jan. 10. Another S&P 500 airline stock, Southwest Airlines LUV, is scheduled to report fourth-quarter 2024 results on Jan. 30.

Upbeat Earnings Estimate Revisions Post UAL’s Rosy Guidance

UAL expects strong and broad-based demand for travel across all geographies to continue in 2025. International passenger revenues are also likely to remain strong throughout 2025 with demand for international flights being robust.

For the first quarter of 2025, UAL expects adjusted EPS in the range of 75 cents-$1.25. The Zacks Consensus Estimate at the time of the earnings release was 65 cents. For 2025, UAL expects adjusted EPS between $11.50 and $13.50. The Zacks Consensus Estimate of $12.56 at that time was within the guidance range.

Owing to UAL's strong results for the fourth quarter of 2024 and the rosy outlook, earnings estimates for 2025 and 2026 have been revised upward by 2.1% to $12.82 and 2.4% to $14.35, respectively, in the past seven days. This shows that analysts are optimistic about this airline’s earnings growth potential.

UAL’s Strong Price Performance

Driven by upbeat travel demand, the UAL stock has had a dream run on the bourses, gaining in triple digits in the past year. Shares of UAL have outperformed its industry in a year’s time as well as well as fellow industry players like Delta and American Airlines AAL.

One-Year Price Comparison

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Wall Street Average Target Price for UAL Suggests an Upside

Based on short-term price targets offered by 22 analysts, the Wall Street average price target is at $128.55 per share, suggesting a 22.4% upside from current levels.

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Attractive Valuation Picture Adds to UAL’s Luster

From a valuation perspective, UAL is trading at a discount compared with the industry, going by the forward 12-month price-to-sales ratio. The company has a Value Score of A.

P/S Ratio (F12M)

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UAL Still a Smart Buy for Investors

Given UAL’s impressive rally, investors might wonder if the opportunity to add this high-flying stock to their portfolio has passed. However, as highlighted in the write-up, UAL has a lot going in its favor, and this rally is far from over. In fact, the stock holds substantial upside potential. UAL currently has a Momentum Score of A.  The sharp reduction in airline seats in the domestic market, which has driven up ticket prices, is serving UAL well. 

With air travel demand expected to remain healthy, UAL stock should continue to perform well. UAL’s expansion strategy, coupled with its focus on premium demand, serves it well and positions the Chicago-based carrier to capture a larger slice of the recovering travel market. Donald Trump's re-election is a positive for the airline industry and is expected to lead to a return to the pro-business stance that characterized his first term.

The abovementioned strengths make UAL an attractive choice for investors seeking a solid long-term investment in the airline industry. Our thesis is supported by the fact that UAL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report

United Airlines Holdings Inc (UAL) : Free Stock Analysis Report

Southwest Airlines Co. (LUV) : Free Stock Analysis Report

American Airlines Group Inc. (AAL) : Free Stock Analysis Report

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