United Continental Holdings, Inc.
) is slated to report its second-quarter 2014 financial numbers on
July 24, before the opening bell.
In the previous quarter, United Continental Holdings' earnings
beat the Zacks Consensus Estimate by a margin of 3.6%. Moreover,
the company has surpassed the Zacks Consensus Estimate in three of
the past four quarters, with an average earnings beat of 2.79%.
Let's see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that United Continental Holdings is
likely to beat earnings because it has the perfect combination of
two key ingredients.
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, stands at +1.37%. This
is because the Most Accurate estimate stands at $2.22, whereas the
Zacks Consensus Estimate is pegged at $2.19. A favorable Zacks ESP
serves as a meaningful and leading indicator of a likely positive
United Continental Holdings currently has a Zacks Rank #2 (Buy).
Note that stocks with Zacks Rank #1 (Strong Buy), 2 or 3 (Hold)
have a significantly higher chance of beating earnings estimates.
Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never
be considered going into an earnings announcement.
The combination of United Continental Holdings' Zacks Rank #2
and +1.37% ESP makes us reasonably confident of a positive earnings
beat on July 24.
What is Driving the Better-than-Expected
We expect impressive performance from United Continental
Holdings in the second quarter, propelled by a solid show in the
Pacific and domestic markets, which will likely improve its second
quarter revenue per mile figure. The company expects per mile
revenue figure to rise 3.5% year over year during the second
quarter, which betters its previous guidance of growth of 1-3%.
Further, cost per mile (excluding fuel) is also expected to remain
flat compared to the previous guidance which had estimated higher
During the first half of 2014, United Continental Holdings has
generated Revenue Passenger Miles (RPMs) of 100.28 billion (up 0.2%
year over year) and Available Seat Miles (ASMs) of 100.43 billion
(down 0.2% year over year) leading to a load factor of 83.3% (up 30
United Continental Holdings is focusing on augmentation of
ancillary revenues by $700 million to $3.5 billion by 2017 and
expects to reach $3 billion by the end of 2014. The carrier hopes
to achieve this by offering new products to customers and
increasing fees on the current ones. In this regard, it continues
to study a passenger's destinations, travel pattern and prior
purchases to provide appropriate ancillary products.
Other Stocks to Consider
Here are other companies you may want to consider as our model
shows these have the right combination of elements to post an
earnings beat this quarter:
Southwest Airlines Co.
) has an earnings ESP of +3.39% and sports a Zacks Rank #1.
American Airlines Group Inc.
) has an earnings ESP of +1.56% and carries a Zacks Rank #1.
Alaska Air Group, Inc.
) has an earnings ESP of +0.92% and sports a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
SOUTHWEST AIR (LUV): Free Stock Analysis Report
UNITED CONT HLD (UAL): Free Stock Analysis
AMER AIRLINES (AAL): Free Stock Analysis Report
ALASKA AIR GRP (ALK): Free Stock Analysis
To read this article on Zacks.com click here.