Shares of United Airlines Holdings Inc. (UAL, Financial) tumbled over 8% on Tuesday following the release of its first-quarter earnings report. Despite this, the stock rebounded over 1.8% Wednesday morning amid a broad rebound in cyclical companies following two consecutive days of market losses.
For the quarter ending March 31, the Chicago-based airline reported a net loss of $1.357 billion, or $4.29 in loss per share, compared with net loss of $1.704 billion, or $6.86 in loss per share, in the prior-year quarter. The carrier reported its fifth consecutive quarter of net losses; further, adjusted net loss of $7.50 per share came in worse than the Refinitiv consensus estimate of adjusted net loss of $7.08 per share.
Coronavirus pandemic continues hampering international travel
United CEO Scott Kirby said that long-haul and international demand remain more than 70% below 2019 levels: International passenger revenue for first-quarter 2021 were $604 million, a 76.4% nosedive from international passenger revenue for first-quarter 2020. International passenger load factor declined to 43.1% from the prior-year quarter value of 70.9%.
Kirby's comments follow the U.S. State Department's recommendation that travelers reconsider or not travel at all to over 80% of the world's countries, citing that the Covid-19 pandemic continues to present an "unprecedented" risk to travelers. On Saturday, worldwide coronavirus casualties topped 3 million according to Johns Hopkins University statistics, a grim milestone amid setbacks in vaccination progress around the globe.
Stock rebounds from early-week tumble amid broad rally in cyclical names
On Wednesday, shares of United traded around $51.22, up 1.83% from Tuesday's close of $50.30 but down approximately 6.8% from Monday's close of $54.99. Nonetheless, the stock remains significantly overvalued based on Wednesday's price-to-GF Value ratio of 2.45.
The Dow Jones Industrial Average traded around 34,029.78, up 208.48 points from Tuesday's close of 33,821.30 yet down 170.89 points from last Friday's close of 34,200.67 following a two-day slide.
GuruFocus ranks United's financial strength 3 out of 10 on several warning signs, which include a low Piotroski F-score of 2 and debt ratios underperforming more than half of global competitors.
Gurus with holdings in United include PRIMECAP Management (Trades, Portfolio), Jim Simon's Renaissance Technologies, Pioneer Investments (Trades, Portfolio), and Paul Tudor Jones (Trades, Portfolio)' Tudor Investment.
Disclosure: No positions.
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